Limelight Networks, Inc.

LLNW Details

Limelight Networks, Inc. (NASDAQ: LLNW) provides content delivery network (CDN) services to deliver digital content over the world wide web. The company is a trusted partner to the world's leading firms (Amazon and Sony), offering them streaming sporting events, worldwide movie debuts, video games, and file downloads for new phone apps. Digital content delivery, video delivery, cloud security, edge computing, and origin storage services are the company's main revenue sources.  The company also provides professional services and other infrastructure services such as transit and rack space. LLNW operates in three regions: the Americas (primary revenue generator), the Middle East and Africa (EMEA), and the Asia Pacific.

Acquisition To Strengthen Edge-Enabled SaaS Solutions: LLNW announced on July 28, 2021, that it had finalized a deal to purchase Moov Corporation, doing business as Layer0, for approximately USD 32.5 million in cash and USD 22.5 million in common stock. The transaction is scheduled to conclude in August 2021. Layer0's all-in-one Jamstack platform includes development, deployment, and monitoring tools for delivering sub-second web apps and APIs. This purchase is a big step forward in Limelight's strategy as a supplier of edge-enabled SaaS solutions, and it will help the company achieve its growth goals.

Geographical Footprint (Source: Investor Presentation, Q2FY21)

6MFY21 Results: The company reported a 13.86% decline in revenues to USD 99.54 million during 6MFY21 (ended June 30, 2021) compared to USD 115.56 million during 6MFY20, primarily due to lower traffic volumes as a result of easing of covid-19 lockdown restrictions and reduction in new content release for consumption. As a result, LLNW reported a sharp increase in net losses to USD 39.23 million during 6MFY21 compared to USD 6.98 million during 6MFY20. As of June 30, 2021, its cash and cash equivalents (including marketable securities) were USD 119.53 million, with total debt (convertible senior notes) of USD 121.37 million.

Key Risks: LLNW's top 20 clients accounted for approximately 77% of its total revenues in both periods during 6MFY21 and 6MFY20. Excessive reliance on certain customers for revenue could harm the company's financial health. Furthermore, during 6MFY21, the firm had three nations, the United States, Japan, and the United Kingdom, contributing more than 10% of its total revenue based on customer geography. As a result, any substantial change in regulatory regulations or economic conditions in these regions might significantly impact the company's operations and cash flows.

Outlook: As of July 2021, LLNW reduces its capital expenditure guidance from USD 20-25 million to USD 15-20 million for the full year FY21.

FY21 Guidance (Source: Earnings Release, July 29, 2021)

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(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.

LLNW Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: LLNW stock fell 60.13% in the past 12 months and is currently trading in the lower-band of the 52-week range of USD 2.42 to USD 7.04. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 33.91. We have valued the stock using the EV/Sales-based relative valuation method and arrived at a target price of USD 3.02. Considering the company's growth prospects, inorganic expansion endeavors, current valuation, and associated risks, we recommend a "Speculative Buy" rating on the stock at the current price of USD 2.44, down 3.56% as of August 17, 2021, at 12:06 PM ET.

*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.

AcelRx Pharmaceuticals, Inc.

ACRX Details

AcelRx Pharmaceuticals, Inc. (NASDAQ: ACRX) is a specialty pharmaceutical company that develops and markets novel medicines for use in medically supervised environments. DSUVIA (also known as DZUVEO in Europe) and Zalviso, both focused on treating acute pain, are part of ACRX's product line. ACRX earns money via product sales (DSUVIA in the US and Zalviso in Europe) and contracts, and other collaborations. In addition, ARX-02 and ARX-03 are the company's pipeline products. DSUVIA product sales in the United States account for the majority of the company income.

New Licensing Contracts: ACRX and Laboratoire Aguettant (Aguettant) signed two licensing agreements on July 14, 2021, giving the latter a license to market DZUVEO in Europe and providing the former with two unique pre-filled syringe product candidates – ready-to-use ephedrine and phenylephrine – for the US. ACRX will earn up to USD 55 million in up-front and sales-based milestone payments at various yearly sales levels from Aguettant and revenue share payments ranging from 35% to 45% of net sales under the DZUVEO out-licensing agreement. Aguettant has the right to receive up to USD 24 million in sales-based milestone payments, at various annual sales levels up to USD 60 million, along with revenue share payments of 40% to 45% of the net sales of the two pre-filled syringe products.

Addressing Warning Letter received for DSUVIA promotional materials: On June 17, 2021, ACRX achieved an agreement with the Food and Drug Administration (FDA) to finalize the remedial steps it has taken or proposes to take in response to the previously disclosed FDA warning letter dated February 11, 2021, addressing certain DSUVIA advertising materials.

6MFY21 Results: The company reported a significant decline of 71.18% in total revenues to USD 0.95 million during 6MFY21 (ended June 30, 2021) compared to USD 3.31 million during 6MFY20, primarily due to a decline in contract and other collaboration revenues. However, net losses declined to USD 18.81 million during 6MFY21 compared to USD 22.53 million during 6MFY20. As of June 30, 2021, ACRX’s cash and cash equivalents (including short-term investments) were USD 55.33 million, with a total debt of USD 18.14 million.

Key Risks: The company's production and commercial sale of DSUVIA in the US and Zalviso in Europe might be the subject of government investigations and enforcement measures to reduce opioid usage and abuse. If ACRX is forced to defend itself in these cases, it will almost certainly incur large legal expenses and may be forced to pay hefty fines, penalties, or settlements in the future. Moreover, DSUVIA product sales also account for a large portion of the company's topline, putting it at risk of product concentration.

Outlook: ACRX in its Q2FY21 press release, stated that it has achieved 516 formulary approvals, and is on track to exceed its guidance of 615 approvals by year-end 2021.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(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.

ACRX Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: ACRX stock price fell 60.21% in the past 6 months and is currently trading in the lower-band of the 52-week range of USD 1.02 to USD 2.94. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 25.72. We have valued the stock using the EV/Sales-based relative valuation method and arrived at a target price of USD 1.13. Considering the company's growth prospects, recent licensing agreements, increasing demand for pain relievers, current valuation, and associated risks, we recommend a "Speculative Buy" rating on the stock at the current price of USD 0.915, down 18.29% as of August 17, 2021, at 03:27 PM ET.

*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. 

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