Paysafe Limited

PSFE Details

Paysafe Limited (NYSE: PSFE) is one of the largest digital commerce companies that enable businesses and consumers to connect and transact by offering industry-leading payment processing, digital wallet, and online cash solutions. It facilitates 70 payment types in over 40 currencies around the world. It derives the majority of its revenues from its Integrated Processing segment. As of July 21, 2021, the company’s market capitalization stood at USD 7.56 billion. PSFE was listed on the NYSE on March 31, 2021, pursuant to completing a business combination agreement with Foley Trasimene Acquisition Corp. II, a special purpose acquisition company.

Protecting the Interest of the Travel Industry: On July 08, 2021, the company announced the global launch of its safeguarding solution for the travel industry, created using PSFE’s payment technology and advanced data management capabilities. This new solution simplifies the task of travel businesses by eliminating the need to collect payment from consumers to provide cash collateral to their acquirer to mitigate the risk of service non-delivery. Instead, consumer payments are held by a third party and released to the travel company only if the terms agreed upon by the company and Paysafe are met.

 Q1FY21 Results: PSFE reported a slight increase of 4.92% in net revenue to USD 377.42 million in Q1FY21 (ended March 31, 2021) compared to USD 359.67 million in Q1FY20. The growth in the topline can be attributable to a 63.39% YoY increase in eCash Solutions revenue, which accounted for 29.92% of the total revenue in Q1FY21, primarily driven by an increase in online consumer spending in all verticals. PSFE reported an adjusted EBITDA of USD 113.23 million in Q1FY21 vs. USD 112.77 million in Q1FY20, with a 140 bps reduction in the adjusted EBITDA margin. Net loss in Q1FY21 was USD 49.0 million vs. USD 51.01 million in Q1FY20. As of March 31, 2021, PSFE had cash and cash equivalents of USD 274.44 million and long-term debt of USD 2.07 billion.

Key Risks: In FY20, PSFE derived 74% of its revenue from high-risk verticals such as iGaming, FX and crypto trading, etc. These verticals are subject to extensive and volatile regulations, which are also complex in interpretation. The issuance of stricter regulations or non-compliance with required laws could adversely affect the company’s reputation, revenues, and earnings. Furthermore, as of December 31, 2020, Cannae LLC and the Blackstone Investors owned 49.5% of PSFE’s common stock, thus gaining substantial control over its operations. This constrains the ability of other shareholders to influence corporate decisions.

Outlook: As of Q1FY21, PSFE expects to clock revenue in the range of USD 365 – 385 million In Q2FY21, with an adjusted EBITDA to the tune of USD 110 – 120 million. Gross profit (excluding depreciation and amortization) for Q2FY21 is expected to be USD 225 – 235 million. For FY21, PSFE anticipates generating USD 1.53 – 1.55 billion in revenues, with adjusted EBITDA ranging between USD 480 – 495 million. Gross profit is expected to range between USD 930 – 970 million in FY21.

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation

 (Analysis by Kalkine Group)

• % Premium/(Discount) is based on our assessment of the company’s FY21E trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

PSFE Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: PSFE’s stock price has increased 9.67% in the past nine months and is currently leaning towards the lower end of the 52-week range of USD 9.60 to USD 19.57. The stock is currently trading below its 50 DMA level, and its RSI Index is 41.12. We have valued the stock using the EV/EBITDA-based relative valuation methodology and arrived at a target price of USD 9.25. Considering the significant uptick in the stock price, flat topline growth, interest in risky verticals, and current valuation, we recommend an “Expensive” rating on the stock at the closing price of USD 10.66, up 2.01% as of July 21, 2021.

* All forecasted figures and Industry Information have been taken from REFINITIV.

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

Vyant Bio, Inc.

VTGN Details

Vyant Bio, Inc. (NASDAQ: VYNT) (formerly Cancer Genetics, Inc.) is a biotechnology drug discovery company engaged in identifying molecule therapeutics in silico, in vitro, and in vivo modalities. It operates the AnalytiX platform, which uses a rank order technique to analyze functional data to identify drug candidates, targets, and biomarkers, and the microOrgan technique, which facilitates human-based drug discovery by using functional microtissues generated from human-induced pluripotent stem cells (iPSC). Its wholly-owned operating subsidiaries are 1) vivoPharm, which provides preclinical test systems that enable clinical diagnostic solutions at an early stage, and 2) StemoniX, producing iPSC-derived neural and cardiac screening platforms that aid in drug discovery and development.

Issuance of Patent: On July 13, 2021, StemoniX, Inc., a wholly-owned subsidiary of VYNT, was issued a patent titled “High Throughput Optical Assay of Human Mixed Cell Population Spheroids” by the United States Patent and Trademark Office (USPTO). The patent covers a novel method of using iPSCs as a valuable tool for studying the biology of complicated human cell types, including those found in the central nervous system (CNS). It also covers the application of 3D co-cultures of cortical neurons and astrocytes that demonstrate spontaneous, rhythmic, and highly synchronized neural activity, which could be seen as calcium oscillations on standard, high-throughput fluorescence readers as a platform for CNS-based discovery activities.

Acquisition of Stemonix: On March 30, 2021, Cancer Genetics completed a business combination with StemoniX, Inc., under which a subsidiary of the company merged with and into StemoniX, with StemoniX becoming a wholly-owned subsidiary of the company. The total consideration for the transaction amounted to USD 59.9 million. Upon completion, the company changed its name to Vyant Bio, Inc.

Q1FY21 Results: VYNT reported a 32.14% growth in net revenue to USD 222 thousand in Q1FY21 (ended March 31, 2021) compared to USD 168 thousand in Q1FY20 attributable to the 231.25% YoY increase in the Product segment to USD 106 thousand, driven by higher sales volumes. Research and development expenses declined by 18.73% YoY due to reduced allocated costs from the Maple Grove facility. In contrast, selling, general and administrative (SG&A) expenses increased by 45.98% YoY to USD 1.22 million due to higher stock-based compensation and professional services fees. As a result, net loss for Q1FY21 amounted to USD 7.37 million vs. USD 1.97 million in Q1FY20. As of March 31, 2021, the company had cash and cash equivalents of USD 33.07 million and long-term debt of USD 57 thousand. In addition, VYNT stated that it has launched commercial-stage, novel disease models focused on treating Rett Syndrome and CDKL5 disorder during Q1FY21.

Key Risks: In FY20, four customers accounted for 61% of VYNT’s total revenue from continuing operations. Therefore, the loss of any of these customers could adversely affect its revenues and results of operations. In addition, it operates in a highly competitive industry, and any advanced innovation or superior product development by its competitors could impact its operations. Furthermore, VYNT is subject to several federal and state regulations, non-observance of which could impact its financial performance.

VYNT Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: VYNT’s stock price has increased 14.80% year-to-date (YTD) and is currently leaning towards the lower band of the 52-week range of USD 2.11 to USD 17.50. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is 35.99. Considering the uptick in the stock price and the limited revenue generation, we believe the current stock price sufficiently reflects the business fundamentals and hence, have chosen to remain on the sidelines. We will re-evaluate the thesis upon further improvement in the topline and profitability. Therefore, we recommend an “Avoid” rating on the stock at the current price of USD 3.18, up 1.27% as of July 21, 2021, 11:50 AM ET.

* All forecasted figures and Industry Information have been taken from REFINITIV.

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

Disclaimer - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.

Any advice provided in this report is general advice only and does not take into account your objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your objectives, financial situation and needs before acting upon it.

There may be a Product Disclosure Statement, Information Statement or other offer document for the securities or other financial products referred to in Kalkine reports. You should obtain a copy of the relevant Product Disclosure Statement, Information Statement or offer document and consider the statement or document before making any decision about whether to acquire the security or product.

You should also seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice in this report or on the Kalkine website. Not all investments are appropriate for all people.

The information in this report and on the Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of information contained in its reports, newsletters and websites. All information represents our views at the date of publication and may change without notice.

Kalkine does not guarantee the performance of, or returns on, any investment. To the extent permitted by law, Kalkine excludes all liability for any loss or damage arising from the use of this report, the Kalkine website and any information published on the Kalkine website (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine hereby limits its liability, to the extent permitted by law, to the resupply of services.

Please also read our Terms & Conditions and Financial Services Guide for further information.

On the date of publishing this report (referred to on the Kalkine website), employees and/or associates of Kalkine do not hold interests in any of the securities or other financial products covered on the Kalkine website.