Desktop Metal, Inc.

DM Details

Desktop Metal, Inc. (NYSE: DM) is engaged in the manufacturing of additive manufacturing systems (3D printing solutions) that include hardware, software, materials, and end components to various industrial and commercial end-users. The company generates revenues through selling additive manufacturing equipment, as well as related accessories and consumables. It also generates revenue through service revenues, which consists of installation, training, post-installation hardware and software support, and various software solutions. DM sells its products in various geographies including the Americas, EMEA (Europe, the Middle East, and Africa), and APAC (Asia Pacific) regions.

Launched 316L stainless steel: DM announced the launch of 316L stainless steel for the Shop System, the world's first metal binder jetting system for machine shops, on August 24, 2021. The introduction of 316L for the Shop System is part of its wide materials strategy, which aims to increase its portfolio and serve an ever-growing range of use cases for its print platforms.

Acquisition of ExOne: On August 11, 2021, DM announced that it had reached a final agreement to purchase all of ExOne's issued and outstanding common stock. ExOne is the market leader in binder jet 3D printing. The deal, which has received unanimous approval from ExOne's Board of Directors, is scheduled to conclude in Q4FY21, subject to ExOne shareholders' approval and the fulfillment of normal closing conditions, including necessary regulatory clearances.

Synergies in ExOne acquisition (Source: Acquisition Conference Call Presentation, August 11, 2021)

6MFY21 Results: The company reported a 5.43x YoY rise in total revenues to USD 30.29 million during 6MFY21 (ended June 30, 2021) compared to USD 5.57 million during 6MFY20, mainly due to an increase in unit shipments and additional revenue in connection with the acquisitions. However, the company reported an increase in net losses to USD 102.29 million during 6MFY21 vs. USD 45.47 million during 6MFY20, primarily due to an increase in general and administrative expenses. As of June 30, 2021, its cash and cash equivalents (including short-term investments) were USD 514.52 million, with a total debt of USD 0.31 million.

Key Risks: The company derived more than 60% of its revenues from countries outside the US in FY20. Global trade tensions and trade wars might harm the company's foreign operations. The introduction of additional tariffs might raise the company's cost structure and, as a result, may have a detrimental effect on its profitability. In addition, the US government has recognized additive manufacturing as a new technology that is presently being evaluated for national security implications. As a result, additional regulatory changes are expected to be enacted, which could result in enhanced export restrictions for 3D printing technology, components, and software.

Outlook: As of August 11, 2021, DM aims to generate over USD 100 million in sales in FY21, ending the year with a run rate of USD 160 million (excluding ExOne acquisition). It estimates adjusted EBITDA between USD (70) and USD (80) million during the fiscal.

 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.

DM Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: DM stock price fell by 63.74% in the past 6 months and is currently in the lower-band of the 52-week range of USD 7.12 to USD 34.94. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 42.29. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 10.15. Considering the significant correction in the stock price in the past six months, anticipated growth, freshly introduced products, and current valuation, we recommend a “Speculative Buy” rating on the stock at the current price of USD 8.23, up 0.36% as of August 25, 2021, at 3:18 PM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

* Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

TFF Pharmaceuticals, Inc.

TFFP Details

TFF Pharmaceuticals, Inc. (NASDAQ: TFFP) is an early-stage biopharmaceutical firm dedicated to developing and commercializing new therapeutic solutions for treating pulmonary diseases using its proprietary Thin Film Freezing (TFF) technology platform. The leading drug candidates of TFFP are Voriconazole Inhalation Powder (TFF VORI) and Tacrolimus Inhalation Powder (TFF TAC). TFFP does not have a commercial drug at this time, but it is working with current partners to advance its initiatives while also establishing new license agreements with large pharmaceutical companies.

Product Pipeline (Source: Company Website)

Positive neutralization of the SARS CoV-2 Delta variant: On July 29, 2021, TFFP and Augmenta Bioworks, a biotechnology firm that uses immunological profiling to enable medical breakthroughs, reported promising in-vitro results suggesting that AUG-3387, their lead anti-COVID-19 monoclonal antibody (mAb), binds to and neutralizes the SARS-CoV-2 Delta variant (B.1.617.2). The Delta form of SARS-CoV-2 is the most widespread strain in the United States, Europe, and other parts of the world.

Completion of enrollment for the TFF TAC phase 1 clinical trial: The enrolment for the Phase 1 clinical study for TFF TAC was completed on July 13, 2021, according to TFFP. Enrollment is a crucial milestone for TFFP, and new emerging results show that inhaled tacrolimus may efficiently administer inhaled tacrolimus to solid organ transplant patients with lower dosages than standard oral versions of the medication.

6MFY21 Results: TFFP has not commenced commercial operations; however, it had a grant revenue of USD 26.16 thousand during 6MFY21 (ended June 30, 2021). TFFP has increased its research and development expenditure to USD 8.04 million during 6MFY21 compared to USD 4.80 million during 6MFY20. TFFP witnessed an increase in net losses to USD 12.31 million during 6MFY21 vs. USD 7.61 million during 6MFY20. As of June 30, 2021, its cash and cash equivalents were USD 52.07 million, with no outstanding debt.

Key Risks: The company's business model is completely reliant on patent rights licensed to them from the University of Texas at Austin (UT). The patent license agreement compels TFFP to pay royalties and milestone payments and abide by several covenants and commitments, and UT has the right to terminate the agreement if it fails to do so. Therefore, any breach of the agreement, for any cause, could result in the company's potential failure. Further, many of the company’s products are in various stages of Research and Development (R&D) and are prone to the risks of failure. The products further run the risk of being ineffective or failing to receive regulatory approval in the future.

Outlook: Top-line data from the TFF VORI study is expected in Q3FY21, and a pivotal trial of TFF VORI will begin in Q4FY21, according to the company’s Q2FY21 press release. TFF TAC top-line data is expected to be released in Q3FY21.

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.

TFFP Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: TFFP stock price fell by 48.07% in the past 9 months, and is currently at the lower-band of the 52-week range of USD 7.00 to USD 21.14. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 46.20.  We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 10.02. Considering the significant correction in the stock price in the past nine months, anticipated growth, strong product pipeline, and current valuation, we recommend a “Speculative Buy” rating on the stock at the current price of USD 8.21, down 3.52% as of August 25, 2021, at 12:43 PM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken 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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