Cassava Sciences Inc

Cassava Sciences Inc (NASDAQ: SAVA) is a clinical-stage biotechnology company focused on the treatment of Alzheimer disease.

Investment Highlights – Expensive at USD 135.30

• The drugs are in the development stage, and SAVA has not generated any revenue yet.
• On the profitability front, the Company had widened the net loss during FY20 as compared to FY19.
• According to the consensus estimates, SAVA will remain loss-making for four more years.
• From a technical standpoint, the stock price is hovering around the upper Bollinger band, indicating that the stock could decline in the near term.
• The 14-day RSI (~71.44) remained in the overbought zone and indicating a correction in the stock price.

One Year Share Price Chart

 (Source: Refinitiv; Analysis done by Kalkine Group)

Considering the lacklustre top-line business and weak profitability, we have given an "Expensive" stance on Cassava Sciences Inc at the closing market price of USD 135.30 (as on 28 July 2021), while we will suggest fresh buying after identifying fresh growth catalysts for SAVA.

Corsair Gaming Inc

Corsair Gaming Inc (NASDAQ: CRSR) is engaged in providing high-performance gear for gamers. Moreover, the portfolio includes Cases, Keyboards, Mice, Headsets, Power Supplies etc.

On 03 August 2021, CRSR will release Q2 FY21 results.

Investment Highlights – Buy at USD 29.30

• The Company had raised full-year FY21 revenue and adjusted EBITDA guidance with the announcement of Q1 FY21 results.
• CRSR’s revenue grew at a CAGR of around 34.78% between FY18 and FY20
• The Gamer and creator peripherals segment had shown a robust year-on-year growth of around 131.9% in the net revenue during Q1 FY21.
• From a technical standpoint, the stock is hovering around the lower Bollinger band, indicating an upside potential in the stock price.
• Moreover, the 14-day RSI (~39.02) is inching towards the oversold zone and supporting the upside potential in the stock price.

Key Risks

• The gaming industry might witness a reduction in demand levels, impacting the top-line revenue of the Company.
• The rise in interest rates may make it difficult for CRSR to obtain funds, and it might cause a delay in the development of new products.
• CRSR is also exposed to the risk of intense competition and market saturation.

Recent News

On 29 June 2021, CRSR stated that it had launched New Full-Tower 7000 Series Cases. Moreover, it had announced a new series of full-tower ATX cases to accommodate the CORSAIR 7000D AIRFLOW and the CORSAIR iCUE 7000X RGB.

Q1 FY21 Financial Highlights for the three months period ended 31 March 2021 (as of 04 May 2021)

 (Source: Company Result)

• The Company had shown around a 71.6% jump in the net revenue during Q1 FY21 as compared to Q1 FY20.
• On the profitability front, the Company had shown a healthy year-on-year growth of around 420.4% in the adjusted net income during Q1 FY21.
• The Company had cash & cash equivalents of USD 125.60 million as of 31 March 2021.

Share Price Chart (since 23 September 2020)

 (Source: Refinitiv; Analysis done by Kalkine Group) 

Valuation Methodology: Price/Earnings Approach (NTM) (Illustrative)

Conclusion

The Company’s products cater to the digital content industry, which had witnessed exponential growth in the past. Moreover, the industry remained on track to grow at a CAGR of around 13% in the next five years. Furthermore, CRSR had witnessed explosive Q1 FY21 top-line revenue growth. Hence, it had raised full-year guidance as well. CRSR expects net revenue to be ranging from USD 1.90 billion to USD 2.10 billion for FY21. The stock made a 52-week High and Low of USD 51.37 and USD 14.09, respectively.

Considering the impressive Q1 FY21 results, improved FY21 guidance, bright industry prospects and valuation conducted above, we have given a "BUY" stance on Corsair Gaming Inc at the closing market price of USD 29.30 (as on 28 July 2021).

*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.

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