Johnson & Johnson

JNJ Details

JNJ Reveals Positive New Data Against Delta Variant: Johnson & Johnson (NYSE: JNJ) is involved in the research and development, manufacturing and sale of a multiple range of personal care hygienic products, pharmaceuticals and surgical equipment. On July 1, 2021, the company informed the market regarding it new data from studies that revealed that JNJ’s one-shot COVID-19 vaccine created solid persistent antibody activity against the new, highly contagious Delta (B.1.617.2) variant. The data also revealed that the immune responses observed endured for a minimum of eight months.

1QFY21 Financial Highlights: During the quarter, the company reported earnings of $2.32 per share, up 6.9% on a year over year basis. Sales of the drug and consumer products giant stood at $22.3 billion, which increased 7.9% from the year-ago quarter, depicting an operational increase of 5.5%. In the domestic market, sales increased 3.9% year over year and came in at $11.1 billion. International sales for the first quarter rose 12.2% year over year. The company exited the quarter, with a cash balance of $12.67 billion. 

Revenues Highlights; Analysis by Kalkine Group

Key Risks: On the flip side, the company faces challenges and uncertainties to develop and innovate new and improved products and technologies, owing to g failure of clinical outcomes, stringent regulatory approvals, and additional analysis of clinal data. 

Lowered Outlook for FY21: The company lowered its FY21 view due to coronavirus outbreak. It now anticipates FY21 adjusted earnings to be in the ambit of $9.42 to $9.57 per share, down from the prior outlook of $9.40 - $9.60 per share. Revenue for FY21 is now expected in the range of $90.6-$91.6 billion, down from the prior outlook of $90.5 billion to $91.7. Operational constant currency sales growth is now expected to be between 8.2%-9.4% as compared to the previously anticipated growth range of 7.5%-9%. The company is set to report 2QFY21 results on 21 July 2021.

Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative) 

Source: 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 months, the stock went up by ~7.37%. The stock is currently quoting towards the higher band of its 52-weeks’ trading range of $133.65 to $173.65. We have valued the stock using the P/E multiple-based illustrative relative valuation method and arrived at a target price with an upside of low double-digits (in percentage terms). We believe that the company can trade at a slight premium as compared to its peer’s average, increase in top and bottom line in 1QFY21, positive new data against Delta (B.1.617.2) variant, and decent liquidity position. We have taken peers like Eli Lilly and Co (NYSE: LLY), Pfizer Inc (NYSE: PFE), among others. Considering the company’s strong performance in 1QFY21, international presence, growth initiatives, current trading levels, and valuation, we give a “Hold” recommendation on the stock at the closing price of $168.98, up ~1.82% on July 2, 2021.  

JNJ Daily Technical Chart, Data Source: REFINITIV  

BigCommerce Holdings, Inc.

BIGC Details

Managerial Changes: BigCommerce Holdings, Inc. (NASDAQ: BIGC) is a software-as-a-service (SaaS) e-commerce platform that enables merchants to grow their business online. On 30 June 2021, the company appointed Rob Kaloustian as its Chief Services Officer, replacing Paul Vaillancourt, who formerly held the position. Kaloustian with an experience of over 20 years, is expected to lead BigCommerce’s Customer Success Services (CSS) organization, to newer heights.

BIGC Unveils Big Open Data Solutions: On 15 June 2021, the company informed the market that it has unveiled Big Open Data Solutions, a full product suite highlighting native as well as best-of-breed partner data solutions. The latest release provides merchants the capability to evaluate, aggregate, identify and use online store data to gain better customer insight and improve decision-making and boost business performance.

1QFY21 Key Results Highlights: During the quarter, the company reported impressive performance with an increase in revenues by 41% to $46.7 million when compared to the prior corresponding period. The year over year increase was mainly due to benefits from proper execution, growing focus toward product improvement and bolstering partner ecosystem. The total annual revenue run-rate (ARR) stood at $196.3 million as at 31 March 2021, depicting a rise of 43% from the end of previous year quarter. Non-GAAP net loss in 1QFY21 stood at $3.1 million, down from a loss of $7.4 million reported in the year-ago period. The company exited the quarter, with cash balance of $208 million.

Revenues Highlights; Analysis by Kalkine Group

Key Risks: The company is exposed to cyber security threats and security breaches, which might lead to business disruptions and have an impact on its profitability.

Outlook: For 2QFY21, the company expects total revenue to be in the range of $46.4-$46.9 million, whereas non-GAAP operating loss is expected to be in the ambit of $8.1-$8.6 million. For FY21, BIGC expects total revenue to be in the range of $196.7-$198.2 million, whereas non-GAAP operating loss is expected to be in the ambit of $31-$32.5 million. 

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative) 

Source: 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 one month, the stock went up by ~17.66%. The stock has a 52-weeks’ high and low level of $162.50 to $42.17, respectively. We have valued the stock using an EV/Sales multiple-based illustrative relative valuation method and arrived at a target price with a correction of high single-digits (in percentage terms). We believe that the company can trade at a slight premium as compared to its peer’s average, increase in top-line in 1QFY21, new product launches, and decent liquidity position. We have taken peers like HubSpot Inc (NYSE: HUBS), Shopify Inc (NYSE: SHOP), among others. Considering the stock’s decent performance in past months, its current trading level, uncertainty due to the virus outbreak, and valuation, we suggest investors to book profit and give a “Sell” rating on the stock at the closing price of $65.08, up by ~0.23% as on 2 July 2021.

BIGC Daily Technical Chart, Data Source: REFINITIV 

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

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