Fuelcell Energy Inc

Fuelcell Energy Inc (NASDAQ: FCEL) is engaged in the manufacturing and selling of fuel cell products that convert chemical energy into electricity.

Investment Highlights – WATCH at USD 6.53

• Over the past three years (FY17 to FY20), the top-line revenue declined at a CAGR of around negative 9.52%. Moreover, the revenue witnessed a significant year-on-year decline during Q2 FY21 as well.
• On the profitability front, FCEL had been consistently widening the net loss from the last four years.
• FCEL had incurred gross loss during Q2 FY21, while it had reported a gross profit during Q2 FY20.
• The consensus estimates had indicated that FCEL would incur a loss for at least three more years.
• From a technical standpoint, the stock is trading lower than the 20-day exponential moving average of USD 8.03, indicating that the stock could decline in the near term.

Key Risks

• Any breach in environmental, climate change, and health & safety laws or regulations can cause significant penalties or liabilities.
• Delay in projects, network failures, and disruption in energy supply can also affect the growth trajectory.

Recent News

Court Case Win: On 12 July 2021, FCEL announced that it had received a favourable ruling with regards to the case filed by POSCO Energy Co in the Court of Chancery in Delaware.

Appointment of Chief Marketing Officer: On 23 June 2021, FCEL unveiled that it had appointed Betsy Schaefer as the Chief Marketing Officer.

Q2 FY21 Financial Highlights for the three months period ended 30 April 2021 (as of 10 June 2021)

 (Source: Company Result)

• During Q2 FY21, the revenue had declined to USD 14 million as compared to USD 18.9 million for Q2 FY20.
• FCEL had widened the loss from operations from negative USD 8.14 million during Q2 FY20 to negative USD 17.39 million for Q2 FY21.
• The Company had cash & cash equivalents of USD 171.20 million as of 30 April 2021, while it was USD 192.1 million as of 31 October 2020.
• Meanwhile, the backlog had demonstrated a marginal decline to USD 1.32 billion as of 30 April 2021.

One Year Share Price Chart

(Source: Refinitiv; Analysis done by Kalkine Group)

Conclusion

FCEL had entered into a power purchase agreement related to the 2.80-megawatt project in Derby, Connecticut. Moreover, it would contribute around USD 59.40 million of new Generation backlog. Furthermore, FCEL expects to achieve an increase in the annualized production rate of 45MW by the end of 2021. The stock made a 52-week High and Low of USD 29.44 and USD 1.58, respectively.

Considering the weak profitability metrics and dismal top-line business during Q2 FY21, we have given a "WATCH" stance on Fuelcell Energy Inc at the current market price of USD 6.53 (as on 19 July 2021 at 09:30 AM ET), while we look forward to reinvesting once we identify fresh growth catalysts.  

ADMA Biologics Inc

ADMA Biologics Inc (NASDAQ: ADMA) is the end-to-end commercial biopharmaceutical company engaged in the development of plasma-derived biologics for the treatment of immunodeficient patients.

Investment Highlights – Speculative Buy at USD 1.51

• With regards to the top-line revenue, ADMA had achieved a stellar CAGR growth of around 22.83% between FY17 and FY20.
• The commercial ramp-up of the IVIG product portfolio had resulted in healthy year-on-year growth of approximately 57% in Q1 FY21 revenue.
• Over the last five quarters (from Q1 FY20 to Q1 FY21), the quick ratio and the current ratio had remained above 3.60x and 7.70x, respectively.
• Currently, ADMA had around seven plasma collection facilities under the corporate umbrella.
• The recent FDA approval of the 4,400-liter IVIG plasma pool scale increase for BIVIGAM® would facilitate the Company to ramp up 600,000 liters of annual production.
• From a technical standpoint, the stock is hovering around the lower Bollinger band, indicating an upside potential in the stock price.

Key Risks

• The Company had been consistently reporting a net loss from the last four years.
• Any further rise in interest rates could make it difficult for ADMA to raise funds for the development of plasma facilities.
• The Covid-19 pandemic led restrictions continued to cause business and operational delays.

Q1 FY21 Financial Highlights for the three months period ended 31 March 2021 (as of 12 May 2021)

 (Source: Company Result)

• During Q1 FY21, ADMA had achieved total revenue of USD 16.0 million as compared to USD 10.2 million at the end of Q1 FY20.
• ADMA had narrowed down the loss per share to a negative USD 0.16 during Q1 FY21.
• The Company had cash & cash equivalents of USD 62.00 million as of 31 March 2021, while it was USD 55.90 million as of 31 December 2020.

One Year Share Price Chart

 (Source: Refinitiv; Analysis done by Kalkine Group) 

Valuation Methodology: EV/Sales Approach (Illustrative)

Conclusion

The Company had achieved several operational milestones across various business segments during Q1 FY21. Moreover, ADMA would focus on narrowing down the gross loss and net loss throughout 2022 as it did during Q1 FY21. Meanwhile, ADMA expects to deliver quarter-on-quarter revenue growth through 2021. The stock made a 52-week High and Low of USD 4.20 and USD 1.38, respectively.

Considering the bright prospects, record quarterly revenue during Q1 FY21, and valuation method as shown above, we have given a "Speculative Buy" stance on ADMA Biologics Inc at the current market price of USD 1.51 (as on 19 July 2021 at 08:30 AM ET), with lower-double digit upside potential based on 3.24x EV/NTM Sales (approx.) on FY21E sales (approx.). 

*All forecasted figures and Industry Information have been taken from REFINITIV.

*The reference data in this report has been partly sourced from REFINITIV.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

Disclaimer - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.

Any advice provided in this report is general advice only and does not take into account your objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your objectives, financial situation and needs before acting upon it.

There may be a Product Disclosure Statement, Information Statement or other offer document for the securities or other financial products referred to in Kalkine reports. You should obtain a copy of the relevant Product Disclosure Statement, Information Statement or offer document and consider the statement or document before making any decision about whether to acquire the security or product.

You should also seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice in this report or on the Kalkine website. Not all investments are appropriate for all people.

The information in this report and on the Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of information contained in its reports, newsletters and websites. All information represents our views at the date of publication and may change without notice.

Kalkine does not guarantee the performance of, or returns on, any investment. To the extent permitted by law, Kalkine excludes all liability for any loss or damage arising from the use of this report, the Kalkine website and any information published on the Kalkine website (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine hereby limits its liability, to the extent permitted by law, to the resupply of services.

Please also read our Terms & Conditions and Financial Services Guide for further information.

On the date of publishing this report (referred to on the Kalkine website), employees and/or associates of Kalkine do not hold interests in any of the securities or other financial products covered on the Kalkine website.