Stocks’ Details

Fastly, Inc.

Revenues Up 41.9% Year Over Year in Q3FY20: Fastly, Inc. (NYSE: FSLY) is an American cloud computing services provider, with a market capitalization of ~US$9.46 billion. Recently, the company stated that it has supported the 2020 Lexus Melbourne Cup race via its official broadcaster and customer Network 10, indicating its loyalty to Australian customers and partners. The company also upgraded its Sydney and Melbourne points of presence (POPs), thus depicting a key expansion of network capacity in Australia.

Q3FY20 Key Financial Highlight: During the quarter, the company reported non-GAAP loss of 4 cents per share, as compared to a loss of 9 cents per share reported in the year-ago period. Revenues for the quarter, came in at $70.6 million, up 41.9% from the prior corresponding period. The company stated that low traffic from TikTok, due to the U.S.-imposed prohibition were key negative during the period. In 4QFY20, FSLY is likely to witness traffic reduction from TikTok. However, customer count increased from 1,951 from the prior quarter end to 2,047. Gross margin in 3QFY20 stood at 59.8%, which expanded 370 basis points (bps) on pcp. Adjusted EBITDA during the quarter came in at $0.8 million, as compared to adjusted EBITDA loss of $4.9 million in 3QFY19. The company exited the quarter with a cash balance of $472 million. Cash flow from operating activities was $27 million in 3QFY20.

Quarterly Financial Highlights (Source: Company Reports)

Guidance: For the 4QFY20, FSLY expects revenues in the range of $80-$84 million. Adjusted loss is expected between 8 cents and 12 cents per share. For FY20, the company expects revenues to be between $288.2-$292.2 million, whereas, adjusted loss is expected to be between 17-21 cents. The company expects lower usage by TikTok and several other customers to be potential headwinds, going forward.

Stock Recommendation: Although lower usage has impacted the company’s growth, however, demand for edge computing solutions is expected to remain robust, in days ahead. The stock of FSLY gave a return of 9.2% in the past one month but went down a marginal 0.97% in the past three months. As per NYSE, the stock of FSLY is trading above the average of its 52-weeks’ high and low level. On a technical front, the stock of FSLY has a support level of ~$81.5 and an immediate resistance level of ~$85.5. Considering the current trading levels, higher customer count, higher enterprise spend, and robust balance sheet, we recommend a ‘Buy’ rating on the stock at the closing price of $83.39, up 0.47% on 23 November 2020.

Ideanomics, Inc.

IDEX Increases Stake in Solectrac: IDEX Ideanomics, Inc. (NASDAQ: IDEX) is a global company, engaged in facilitating the adoption of commercial electric vehicles and supports next-generation financial services and fintech products. On 23 November 2020, the company informed the market that it has increased its interest to 24% in Solectrac, Inc. via a follow-on investment of an added $1.3 million, which is expected to close in the coming weeks. IDEX had earlier announced that it purchased 14.7% of Solectrac, Inc. for the consideration of $1.3 million.

October & Q42020 Update: On 16^th November 2020, the company announced its Mobile Energy Global (MEG) unit’s sales events for the month of October and Q42020. For the month of November 2020, MEG produced a total of 102 units. During the July through September 2020, 340 units were still pending for expected delivery. Previous deals and new deal win as well as enhancements in the company’s operational efficacy, aided the company to achieve its 2020 goals and strengthen its position for future.

IDEX to Buy Timios: On November 12, 2020, the company announced that it has inked a deal to acquire 100% of privately held Timios Holdings Corp. ("Timios") in an all-cash transaction, subject to customary closing conditions. The acquisition is in line with IDEX’s strategy to strengthen its foothold in the fintech industry, which is in transitional phase and have high barriers to entry.

Q3FY20 Key Financial Highlights: During the quarter, the company reported revenues of $10.6 million, out of which MEG business unit contributed $10.1 million. Strong growth in the Taxi and Ridesharing segment were key positive during the quarter. This depicted the highest revenues contribution by MEG since IDEX started its business. Gross profit for the quarter came in at $0.7 million, down from $2.9 million reported in 3QFY19. In 3QFY20, the company reported loss from operations of $12 million as compared to a loss of $9.4 million reported in 3QFY19, owing to lower gross profit in the current quarter. The company ended the quarter with a cash balance of $27.6 million.

Quarterly Financial Highlights (Source: Company Reports)

Key Risks: The COVID-19 led pandemic disrupted supply chains and hampered economic growth. In order to stay afloat and curb the impact of coronavirus, the company has incurred increased expenditure, which may dampen the company’s growth prospects, going forward. The company also faces challenges in expanding its international and cross-border businesses and operations.

Stock Recommendation: The stock of IDEX is currently inclined towards its 52-weeks’ high level of $3.98. Debt to Equity in 3QFY20 stood at 0.19x, higher than 2QFY20 figure of 0.15x.  The stock of IDEX gave a return of 526.04% in the past six months and ~178.78% in the past one month. On a technical front, the stock of IDEX has a support level of ~$2.1 and a resistance level of ~$3.2. On a TTM basis, the stock of IDEX is trading at a price to book value multiple of 3.2x, higher than the industry median (Investment Banking & Investment Services) of 1.9x and thus seems overvalued. Considering the current trading levels, recent volatility in the stock prices, higher Valuation, rise in operating expenditure and key risks, we give an ‘Avoid’ rating on the stock at the closing price of $2.62, up by 70.13% on 23 November 2020, due to recent increase of its interest in Solectrac, Inc.

Oragenics Inc.

OGEN Prices Public Offering: Oragenics Inc. (AMEX: OGEN) is a health care company, engaged in developing new antibiotics against infectious diseases. The company is currently focused on the creation of the Terra CoV-2 vaccine candidate to curb the impact of novel COVID-19 virus. Recently, the company announced the pricing of an underwritten public offering of 14,189,189 common shares at a price of $0.37 per share, subject to customary closing conditions. OGEN expects gross proceeds from the offering to be ~$5,250,000. The company has also given an additional 45-days purchase option to the underwriters to buy 2,128,378 shares of common stock to cover over-allotments, if any.

FDA Encourages OGEN’s Development Program to Develop Terra CoV-2: On 6 October 2020, the company informed the market that it has received a request from the U.S. Food and Drug Administration (“FDA”) to clinically develop its SARS-CoV-2 vaccine, Terra CoV-2. As a result, OGEN opines its timelines for filing an Investigational New Drug (“IND”) application by the end of 1QFY21 as well as the beginning of the Phase 1 study early in the 2QFY21.

September 2020 Quarter Update: For the quarter ending 30 September 2020, the company reported total operating expenses of $4.5 million and a net loss of $4.49 million. Net cash used from operating activities came in at $13.3 million. At the end of the quarter, the company had cash and cash equivalent of $10.04 million and total assets of $11.28 million.

Quarterly Results Highlights (Source: Company Reports)

Risk Analysis: The company has incurred significant losses since its inception and further expects to experience losses in the near future, due to higher research and development expenditure, which includes clinal trials. The COVID-19 led disruption has also created economic challenged around the world and is affecting the company’s employees, and business operations. Stiff competition and regulatory approval add to the woes.

Stock Recommendation: The stock of OGEN is trading close to its 52-weeks’ low level of 0.036. The stock of OGEN have corrected 53.1% in the past three months and 26.7% in the last one month. The company currently seems to be well positioned to fund its operations. On a TTM basis, the stock of OGEN is trading at a price to book value multiple of 2.5x, lower than the industry median of 3.4x. On a technical front, the stock of OGEN has a support level of ~$0.250 and an immediate resistance level of ~$0.45. Considering the current trading levels, company’s progress in the development of Terra CoV-2 vaccine candidate, pricing of common stock and key investment risks, we recommend a ‘Speculative Buy’ rating on the stock at the closing price of $0.3936, down by 1.35% on 23 November 2020.

Daily Comparative Price Chart (Source: Company Reports)

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