Foley Trasimene Acquisition Corp. II

BFT Details

Merger with Paysafe Group Holdings Limited: Foley Trasimene Acquisition Corp. II (NYSE: BFT) is a special purpose acquisition company focused on forming a merger or a business combination with one or more businesses or entities. As on 18 February 2021, the company’s market capitalization stood at ~$3.106 billion. On 7 December 2020, the company announced that it has entered into a definitive agreement with Paysafe Group Holdings Limited to form a merger. Upon closing the transaction, the newly combined company will operate as Paysafe, and it will get listed on the New York Stock Exchange (NYSE) under the symbol PSFE. The transaction reflects an implied pro-forma enterprise value for Paysafe of approximately $9 billion. It is expected that the transaction will be completed in the first half of 2021. Cannae Holdings, Inc. (NYSE: CNNE), an investment company, has announced a private placement of $350 million in the merger. This investment is in addition to Cannae’s forward purchase agreement of $150 million.

About Paysafe: Paysafe is a leading integrated payments platform with highly differentiated B2B and B2C global network. The merger with BFT will allow Paysafe to accelerate its growth opportunities across the business, particularly in fast growing sectors such as iGaming. The company’s net revenue has increased from $864 million in 2017 to $1.4 billion in 2019, representing a 27% CAGR. In 2019, Paysafe had reported adjusted EBITDA of $466.3 million and a net loss of $111.9 million.

Outlook: In 2021, Paysafe expects its transactional volume to be around $103 billion and organic revenue to be around $1.5 billion. From 2020 to 2023, Paysafe expects its volume to grow at a CAGR of 15% and expects to witness growth across all segments. Over the same period, organic revenue is expected to grow at a CAGR of 11%.

Volume and Organic Growth Estimates (Source: Company Reports)

Stock Recommendation: BFT gave a positive return of 63.35% in the past three months and is currently inclined towards its 52 weeks’ high range of $19.57. On a technical analysis front, the stock of BFT has a support level of ~$14.92 and a resistance level of ~$18.01. Considering the steep price movements and returns in the past three months and current trading levels, we are of the view that most of the positive factors of the company have already been factored in at current level. Hence, we suggest investors to wait for better entry level and give an “Expensive” rating on the stock at the current market price of $16.94, down by 2.64% as on 18 February 2021.

BFT Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Rigel Pharmaceuticals, Inc.

RIGL Details

Strategic Collaboration with Lilly: Rigel Pharmaceuticals, Inc. (NASDAQ: RIGL) is a biotechnology company, focused on discovering, developing, and providing novel small molecule drugs that help in the treatment of hematologic disorders, cancer, and rare immune diseases. The company recently announced a global exclusive license agreement and strategic collaboration with Eli Lilly and Company (NYSE: LLY) to co-develop and commercialize Rigel's R552, a receptor-interacting serine/threonine-protein kinase 1 (RIPK1) inhibitor, for all indications, including autoimmune and inflammatory diseases. Under the collaboration, the company is expected to receive an upfront cash payment of $125 million with the potential for up to an additional $835 million in future development, regulatory, and commercial milestones.

Q3FY20 Result Highlights: For Q3FY20, the company reported total net product sales of $16.3 million, up 39% on pcp. Total revenue for Q3FY20 stood at 18.4 million. The company reported total costs and expenses of $32.2 million in the quarter, lower than $32.9 million in the same period of 2019, mainly due to the timing of certain commercial-related activities due to the COVID-19 pandemic, partially offset by the increase in personnel-related costs and increased use of consultants.

Q3FY20 Results (Source: Company Reports)

Outlook: The company is continuing to register its Phase 3 trial in warm autoimmune hemolytic anemia (wAIHA), and it has already received Fast Track designation from the FDA, which is intended to expedite the review of a potential regulatory filing. The top-line data from NIH Phase 2 clinical trial in COVID-19 is expected in April 21. In a recent business update, the company notified that it expects its Q4FY20 total revenue to be around $18.4 million. FY20 net product sales grew to around $61.7 million, representing a YoY growth of 41%.

Key Risks: The company is exposed to the risks associated with the commercialization and marketing of TAVALISSE. There is also a risk that TAVALISSE clinical trials may not be predictive of real-world results or results in subsequent clinical trials.     

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 six- and three-months period, the stock of RIGL has provided a return of 85.93% and 75%, respectively. The stock has a 52-weeks low and high of $1.23 and $5.50, respectively. On a technical analysis front, the stock of RIGL has a support level of ~$4.34 and a resistance level of ~$5.00. We have valued the stock using the 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 the company can trade at a discount to its peer average EV/sales (NTM Trading multiple), considering its negative ROE and net margin, impact of COVID-19 on the timeliness of clinical studies, while also taking into account that the company has been trading at a discount in the past 3-years over its peer median. Considering the decent growth in the company’s net product sales, reduced cost, and expenses in Q3FY20, recent strategic collaboration with Eli Lilly and Company, valuation, and associated key risk, we give a “Speculative Buy” recommendation on the stock at the closing price of $4.76, up by 5.08% on 18 February 2021, owing to the update related to the strategic collaboration with LLY.

RIGL Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Disclaimer  

The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as personalised advice.