Stocks’ Details

Azure Power Global Limited

Decent Rise in Q3FY21 Operating Revenue: Azure Power Global Limited (NYSE: AZRE) is a leading independent solar power producer in India that mainly sells solar energy to central and state government utilities as well as independent industrial and commercial customers. For the quarter ending 31 December 2020 (Q3FY21), the company reported operating revenue of INR 3,521 million (US$ 48.2 million), up 15.6% on pcp. Over the quarter, the company generated 783.7 million kWh of electricity, up 14.4% on pcp. Cost of operations for the quarter stood at INR 306 million (US$ 4.2 million), up 14.6% on pcp, mainly due to an increase in operational expenses from projects commissioned during the quarter. Net loss for the quarter stood at INR 1,088 million (US$ 14.9 million).

Q3FY21 Results (Source: Company Reports)

Key Risks: The company is exposed to the risks related to the changes in the commercial and retail prices of traditional utility generated electricity and changes in policies and regulations, including net metering and interconnection limits or caps. The company is also exposed to the risks and uncertainties associated with COVID-19 pandemic.

Outlook: Currently, the company is working on signing PPAs (Power Purchase Agreements) for the 4 GW manufacturing linked tender for which a Letter of Award (LOA) has already been received. Looking ahead, the company is focused on taking on contracts that create shareholder’s value and earn returns that are above its cost of capital. For Q4FY21, the company expects its revenue to be in the range of INR 4,335– INR 4,435 million. For FY22, the company expects its total revenue to be between INR 17,900 – 18,900 million.

Stock Recommendation: Over the last three months, the stock has corrected by 21.24% and is trading lower than the average 52-weeks’ price band of $53.60 -$12.56, offering a decent opportunity for accumulation. On the technical analysis front, the stock has a support level of ~$25.05 and a resistance of ~$32.82. Considering the company’s decent performance in Q3FY21, modest outlook, current trading level and associated risks, we give a “Speculative Buy” recommendation on the stock at the closing price of $27.03, down by 7.53% as on 4 March 2021. 

Dynavax Technologies Corporation  

FY20 Result Highlights: Dynavax Technologies Corporation (NASDAQ: DVAX) is a biopharmaceutical company focused on developing and commercializing vaccines. The company recently announced that its CEO, Ryan Spencer, will present at the H.C. Wainwright Virtual 2021 Global Life Sciences Conference being held on March 9-10, 2021. During 2020, the company made substantial progress in both HEPLISAV-B and CpG 1018 businesses. The company also progressed numerous collaborations to develop its proven vaccine adjuvant CpG 1018 across multiple indications, including COVID–19, pertussis, and universal flu. For the full year, the company reported total revenue of $46.6 million, up 32% on FY19. R&D expenses for FY20 stood at $28.6 million, down from $62.3 million in FY19. Net loss for FY20 stood at $75.2 million, down from $152.6 million in FY19. As at 31 December 2020, the company had cash, cash equivalents and marketable securities of $165.03 million.

FY20 Results Highlights (Source: Company Reports) 

Key Risks: The company is exposed to the risk related to the delay in the receival of necessary approvals for the clinical development programs. The company is also exposed to the risks related to the timing of completion and results of current clinical studies of HEPLISAV-B.

Outlook: For Q1FY21, the company expects its revenue from CpG 1018 business to be between $40 million and $60 million. In the second quarter of 2021, the company expect to come up with the final report for HEPLISAV-B post-marketing study. The data from the ongoing Phase 1 study of an improved Tdap vaccine candidate adjuvanted with CpG 1018 is anticipated in the fourth quarter of 2021.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

Data Source: Refinitiv, Thomson Reuters, Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: Over the last one month, the stock of DVAX has provided a negative return of 10.5% and is trading higher than the average 52-weeks price band of $12.44 and $1.80. On the technical analysis front, the stock has a support level of ~$5.9 and a resistance of ~$10.27. We have valued the stock using an EV/Sales multiple based illustrative relative valuation method and arrived at a target price with an upside of low double-digit (in % terms). We believe that the company might trade at a slight premium to its peer average EV/Sales (NTM Trading multiple), considering its substantial progress in both HEPLISAV-B and CpG 1018 businesses, modest outlook, and also taking into account that the company has been commanding a premium in the past 3-years over its peer average. We have taken peers like Biogen Inc (NASDAQ: BIB), Pfizer Inc (NYSE: PFE), Regeneron Pharmaceuticals Inc (NASDAQ: REGN) etc. Considering the company’s progress in the development of proven vaccine adjuvant CpG 1018 across multiple indications, decline in FY20 losses, modest outlook, and valuation, we give a “Buy” recommendation on the stock at the closing price of $8.47, down by 0.24% as on 4 March 2021.

Arbutus Biopharma Corporation  

FY20 Result Highlights: Arbutus Biopharma Corporation (NASDAQ: ABUS) is a clinical-stage biopharmaceutical company mainly focused on developing a cure for people with chronic hepatitis B virus (HBV) infection, as well as therapies to treat coronaviruses. In an update provided on 4 March 2021, the company confirmed that the over the past 12 months, the current data set for AB-729 has grown substantially, demonstrating the potential of AB-729 to be a cornerstone drug in future HBV combination regimens. For the year ended 31 December 2020, the company reported total revenue of $6.9 million and total loss from operations of $57.8 million. As at 31 December 2020, the company had cash, cash equivalents and investments of $123.3 million. Net loss for the year stood at $63.745 million, compared to $153.72 million in FY19.

FY20 Result Highlights (Source: Company Reports)

Key Risks: The company is exposed to the risks related to the receival of the necessary regulatory approvals for the clinical development of Arbutus’ products. The company is also exposed to the risks and uncertainties caused by the COVID-19 pandemic.

Outlook: In 2021, the company expects to initiate several AB-729 Phase 2 proof-of-concept combination clinical trials. In the first half of 2021, the company expects to begin a Phase 1a/1b clinical trial of AB-836 in healthy volunteers and subjects with HBV. In 2021, the company expects its net cash burn to be between $70 to $75 million.

Stock Recommendation: Over the last three months, the stock has corrected by 20.30% and is trading lower than the average 52-weeks price level band of $9.02 and $0.88, offering a decent opportunity for accumulation. On the technical analysis front, the stock has a support level of $2.79 and a resistance of $4.01. Considering the reduction in FY20 net loss, the company’s progress in the development of AB-729, expected clinical trials in FY21, current trading level and associated key risks, we give a “Speculative Buy” recommendation on the stock at the closing price of $3.14, down by 13.74% as on 4 March 2021. 

Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

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