Stocks’ Details
 

Energous Corporation

WATT Partners With 28Gorilla: Energous Corporation (NASDAQ: WATT) is engaged in developing disruptive wire-free charging technology. The company’s solutions facilitate wireless charging or powering of electronic devices at distance. On May 6, 2020, the company announced that it has entered into a partnership with 28Gorilla to create the initial equestrian health tracing device for American Equus. The latest sensor will be equipped with WattUp wireless charging and will facilitate monitoring and tracking horse’s temperatures, heart rate and will provide other important data necessary to monitor their health. Notably, the tracker is expected to be available in Q4FY20.
WATT Announces a New Developer Kit:  Recently, the company stated that its latest WattUp PowerHub Developer Kit which permits manufacturers to simply assimilate charging-over-the-air technology into other products is now available. The new kit helps over-the-air charging of devices, which includes smartwatches, fitness bands, smart glasses, and medical devices, to name few. Notably, the company had earlier revealed that it has obtained the FCC certification for its latest innovative WattUp over-the-air wireless charging transmitter. 
 
1QFY20 Financial Highlights: During the quarter, the company reported revenues of $61,475, as compared to $66,500 reported in the year-ago period. Net loss for the quarter stood at $8.6 million, as compared to a net loss of $11 million reported in the year-ago period. Total operating expenses for the quarter came in at $8.7 million, down from the year-ago figure of $11.2 million.Adjusted EBITDA stood at ($6.3) million, as compared to ($7.7) million reported in the year-ago quarter. The company exited the period with cash balance of $19.9 million and has a debt-free balance sheet.
 

Key Financial Highlights (Source: Company Reports)
 
Stock Recommendation: The stock of WATT closed at $2.12 with a market capitalization of ~$77.2 million. The stock made a 52-week low and high of $0.61 and $5.29 and is currently trading at the lower band of the range. The stock witnessed a sharp correction of 60.2% in the past one year. However, in the last one month and three months, the stock went up by 149.57% and 13.56%, respectively. The company has a current ratio of 6.27x in 1QFY20, as compared to the industry average of 2.23x. ROE for the 1QFY20 stood at -46.1%. On TTM basis, the stock is trading at a P/BV multiple of 4x, higher than the industry median (Industrial) of 1.2x.Considering the financial risk with respect to the company, price movement in the past, current trading levels and valuation, we have a watch stance on the stock at the closing price of $2.12, up 5.47% as on 8 May 2020.
 
Vaxart, Inc
 
VXRT Announces Positive Pre-Clinical Data: Vaxart, Inc (NASDAQ: VXRT) is a clinical-stage company, which is engaged in developing and manufacturing of a broad range of oral recombinant vaccines based on its commercial delivery platform. On 30 April 2020, the company stated the optimistic data from pre-clinical findings on its oral vaccine applicants against COVID-19 virus. Notably, many candidates generated unaffected responses in all tested animals after a single dose. The company had begun a plan to develop coronavirus vaccine based on its VAAST oral vaccines platform in January this year.
 
1QFY2020 Financial & Corporate Update: The company had cash balance of $29.9 million, at the end of 31 March 20202. Notably, during the quarter the company received a total of $10.3 million from warrant exercises.The company opines that it will receive $2.8 million in royalty revenue during the quarter. The company had entered into a manufacturing deal with Emergent BioSolutions. As per the agreement, Emergent will deliver the clinical material for VXRT’s trial oral vaccine applicants against coronavirus virus. Emergent intends to deliver majority cGMP vaccine to aid Vaxart commence a phase I clinical study in the 2H FY20 in the United States.
 

VAAST Highlight (Source: Company Report)
 
Stock Recommendation: The stock of VXRT closed at $2.55 with a market capitalization of ~$183.7 million. The stock made a 52-week low and high of $0.25 and $4.12 and is currently trading at the upper band of the range. In the last one month and three months, the stock went up by 51.19% and 128.83%, respectively. In FY19, the company incurred a loss of $18.6 as compared to the loss of $18.0 in FY18. The stock price has been rising on the heels of VXRT’s recent improvement in making efforts to fight the COVID–19 pandemic and develop a vaccine for the same. On TTM basis, the stock is trading at a Price to Book Value multiple of 13.9x, higher than the industry mean (Healthcare) of 2.5x. Considering the fundamentals, returns on the stock, current trading levels and valuation, we have a watch stance on the stock at the closing price of $2.55, up 0.39% as on 8 May 2020.
 
Constellation Brands, Inc.
 
STZ’s Subsidiary Exercises Warrants: Constellation Brands, Inc. (NYSE: STZ) was founded in 1945 and produces and markets beer, wine and spirits. The company is one of the leading beer company in the United States and carries out its business operations in Mexico, Canada, Italy, and New Zealand. On May 1^st, 2020, the company’s wholly-owned subsidiary, Greenstar Canada Investment Limited announced that it has exercised an aggregate of 18,876,901 warrants to acquire common shares of Canopy Growth Corporation.
 
COVID-19 Update: Amid the coronavirus outbreak in China, STZ is taking necessary measures to curb its brewery production activities in Mexico to a certain level that protects the environment and prevents irrevocable impact to its operations. This move will help to ensure the company’s capability to re-establish its functions in Mexico, post the uplift of federal government restrictions. The company is also making extra efforts to ensure the well-being and health of its employees, business partners and surrounding communities.
 
4QFY20 Key Financial Highlights: During the quarter, the company reported comparable earnings of $2.06 per share (including Canopy Growth equity loss of 12 cents), up 12% year over year. The company’s earnings (excluding impacts of Canopy Growth) stood at $2.18 per share, increasing 15% on pcp. The company reported net sales of $1,902.9 million, which increased ~6% year over year. Sales from beer business came in at $1,187.5 million, up 8.9% year over year. Adjusted gross profit for the quarter stood at $971.7 million, up 8% on pcp. The company exited the period with cash balance of $81.4 million, with long-term debt amounting to $11,210.8 million. In FY20, cash flow from operations stood at $2.6 billion, whereas adjusted free cash flow came in at $1.8 billion.
 
Overall, in FY20 the stock reported revenue of $8,344 million, up 3% on yoy whereas operating income was reported at $2,155 million, down 11% on yoy basis.
 

Key Financial Highlight (Source: Company Reports)
 
What to Expect: Due to COVID-19 outbreak, the company will not be able to provide FY21guidance. Nevertheless, it summarized some business prospects for FY21, before taking the impacts of the COVID-19 outbreak. For FY21, STZ predicts 7-8% net sales growth for the beer segment, whereas organic net sales are expected to grow 8-10%, with operating margin of 39.5-40%. For FY21, STZ predicts to generate operating cash flow of $2.3-$2.5 billion.
Valuation Methodology: P/Cash Flow Multiple Based Relative Valuation (Illustrative)

 P/E Based Valuation (Source: Refinitiv, Thomson Reuters)
 
Note: All forecasted figures have been taken from Thomson Reuters, NTM: Next Twelve Months
 
Stock Recommendation: The stock of STZ closed at $166.06 with a market capitalization of ~$32 billion. The stock made a 52-week low and high of $104.28 and $212 and is currently trading at the upper band of the range. The stock witnessed a correction amid the ongoing panic related to coronavirus and fell 17.75% and 20.73% in the three months and one year, respectively. However, in the last one month, the stock went up by 10.15%. The business witnessed decent fourth-quarter results with top-line increasing on a year over year basis. Also, the company remains delighted with the performance of the Corona brand family, which is touted to be the best quality brand among Hispanics. We have valued the stocks using price/cash flow multiple based illustrative relative valuation method and arrived at a target price with an upside of lower double-digit (in % terms). Considering the above factors, current trading levels, and price movement in the recent past, we give a “Buy” recommendation on the stock at the closing price of $166.06, up 0.78% as on 8 May 2020.
 
 
 
 
Brown Forman Corporation
 
Brown Forman Donates $1 Mn: Brown Forman Corporation(NYSE: BF.B) is engaged in manufacturing, bottling, importing, exporting, marketing and selling of a wide variety of alcoholic beverages under recognized brands. On 23 March 2020, the company stated that it has made a donation of $1 million to COVID-19 response funds, to supports various locations and agencies.
 
COVID-19 Update: In another update, the company stated that it is temporarily suspending tours, tastings, and retail shops at all of its cooperage, distillery, and winery locations, to curb the spread of coronavirus. The company remains on track to reduce the risk to employees and guests and take necessary measure to ensure their well-being and safety.
 
3QFY20 Key Financial Highlight: The company reported earnings per share of 48 cents, up 2% from the prior corresponding period. It reported net sales of $899 million on a reported basis, which was almost flat on year over year basis. On an underlying basis, net sales increased 3%, owing to growth across geographies and the robust brand portfolio. Gross profit stood at $557 million, down 2% year over year. Selling, general and administrative (SG&A) expenses rose 2% year over year, while advertising expenses came in flat on pcp. The company exited the quarter with cash balance of $276 million, and long-term debt amounting to $2,293 million.
 

Key Financial Highlight (Source: Company Report)
 
Outlook: For FY20, the company expects low-single-digit underlying sales growth and predicts underlying operating margin to be flat to decline modestly. Also, earnings per share are now expected to be in the range of $1.75-$1.80.
 
Stock Recommendation: The stock of BF.B closed at $65.97 with a market capitalization of ~$30.75 billion. The stock made a 52-week low and high of $44.68 and $72.85 and is currently trading at the upper band of the range. The stock witnessed a correction of 4.11% in the three months. However, in the last one month, the stock went up by 7.76%. The company is set to report its 4QFY20 results on 3 June 2020. On the TTM basis, the stock is trading at an EV/Sales multiple of 9.6x, higher than the industry mean (Beverages) of 4.2x. Considering the above factors, current trading levels and valuation, we have a watch stance on the stock at the closing price of $65.97, up 2.04% as on 8 May 2020.
 
 
Comparative Price Chart (Source: Refinitiv,Thomson Reuters)

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