Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

Equity Capital Markets

Automatic Data Processing / Equity Capital Markets

<ul><li>Automatic Data Processing had a strong start to the year, with revenue growth of 10% and margin expansion of 140 basis points with respect to its earnings.</li><li>In addition to the strong ES performance, ADP's PEO had another strong quarter, with 15% revenue growth and 15% average worksite employee growth, exceeding its high expectations.</li><li>Moreover, if ADP continues to drive outsized bookings performance for the rest of the year, their turnover and margins could surpass our estimates in the report.</li></ul>

Automatic Data Processing had a strong start to the year, with revenue growth of 10% and margin expansion of 140 basis points with respect to its earnings.In addition to the strong ES performance, ADP's PEO had another strong quarter, with 15% revenue growth and 15% average worksite employee growth, exceeding its high expectations.Moreover, if ADP continues to drive outsized bookings performance for the rest of the year, their turnover and margins could surpass our estimates in the report.

Automatic Data Processing Inc: Financial & Price Forecasts

<ul><li>Automatic Data Processing delivered a solid start to the new financial year with revenue growth of 10% and margin expansion of 140 basis points, resulting in a 17% increase in adjusted diluted EPS.</li><li>Their new business bookings were strong and the company saw another record Q1 bookings amount above their forecasts.</li><li>In addition to the outstanding ES performance, the company’s PEO had another great quarter, with 15% revenue growth and 15% average worksite employee growth, exceeding the company's high expectations.</li></ul>

Automatic Data Processing delivered a solid start to the new financial year with revenue growth of 10% and margin expansion of 140 basis points, resulting in a 17% increase in adjusted diluted EPS.Their new business bookings were strong and the company saw another record Q1 bookings amount above their forecasts.In addition to the outstanding ES performance, the company’s PEO had another great quarter, with 15% revenue growth and 15% average worksite employee growth, exceeding the company's high expectations.

Automatic Data Processing (ADP): Why Is This HR Tech Player Soaring To New Highs? (12/2021)

<ul><li>Automatic Data Processing (ADP) reported yet another all-around beat backed by strong new business bookings.</li><li>The company’s leading Human Capital Management solution, RUN has over 750,000 clients and has witnessed a strong momentum.</li><li>The company’s overall client base has gone up by 7% to 920,000 and it is a strong player in the human capital and workforce management tech solutions.</li></ul>

Automatic Data Processing (ADP) reported yet another all-around beat backed by strong new business bookings.The company’s leading Human Capital Management solution, RUN has over 750,000 clients and has witnessed a strong momentum.The company’s overall client base has gone up by 7% to 920,000 and it is a strong player in the human capital and workforce management tech solutions.

Automatic Data Processing - Investment Thesis

AlphaSituations-Event/Catalyst Driven Research, AlphaSituations

Robert Sassoon

AlphaSituations-Event/Catalyst Driven Research

AlphaSituations

Since its establishment, AlphaSituations has delivered a track record of outperformance with a hit rate of winners of more than 70% of its portfolio of ideas generating annualized average returns of 20%. In January 2022, AlphaSituations was contracted by Water Tower Research, an investor engagement and stakeholder communication platform to provide coverage of Special Situations

Event-Driven

Back in September 2020, amid a boom in SPAC investing that had never been seen before and against the backdrop of profitless companies (and in some cases years from actual revenue generation) being propelled to insane valuations , we published an insight effectively warning investors to be very wary and selective (cf. MergerTalk: SPACs May Have Become The Hot New Trend, But SPAC Investment Requires A Health Warning. Read more: <a href="https://skr.ma/JNmvg" target="_blank" rel="noopener">https://skr.ma/JNmvg</a> ). The fresh supply of SPAC IPOs in the US keeps on coming -the number of completed SPAC IPOs so far this year has already eclipsed the record total set for all of 2020 by 51% (374 vs 248)  and is well on target to surpass the number of traditional IPOs in the US for the second year running - in  2020, there were a total of 227 traditional IPOs with that number standing at 157 so far this year, well behind SPAC IPOs. In 2020, SPACs raised more cash ($83BN) than the total amount raised  over the preceding 17 years. So far in 2021, the cash raised from SPAC IPOs is already approaching 40% higher than 2021 at $114BN.However, these stats do not disguise the fact that the enthusiasm for SPACs has cooled  since mid-February. A snapshot reflection of this change in mood is the performance of the first 3 SPAC ETFs introduced to the market which began with SPAK at the beginning of October 2020.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/219/878/original/image_45285074321626909062078.png?1626909063" class="editor-image img-responsive" data-smartkarma-image-id="219878"></figure>The average size of SPAC IPOs this year is 9% lower at $305MN than last year's ~$336MN. Perhaps more revealing, out of a total of 152 SPACs total that have announced business combinations and are in the process of de-SPACing, 92 (i.e., 61%) are trading below the SPAC IPO price of $10.  Of the 134 SPAC business combinations completed around one half are currently trading above the  SPAC IPO price, and many of those well below their post-merger highs.As our November insight indicates, we have been somewhat skeptical of the SPAC investment space. We believe that much of the SPAC investment frenzy witnessed in the past 18 months has was driven by  thematic interest over the more diligent scrutiny of the business combination.<blockquote>The observation is that not all SPAC mergers are created equal and that the majority are prone to value destruction.  It appears that SPAC investors are most excited about transactions in “emerging” trends such as green mobility or pandemic resistant areas such as online gaming and packaged/healthy foods rather than companies with a solid fundamental track record of revenue generation and profitability.</blockquote>Source: MergerTalk: SPACs May Have Become The Hot New Trend, But SPAC Investment Requires A Health Warning, November 2020We are not suggesting for one moment that SPAC investing is a passing fad. The SPAC investing community is a far cry from the predominantly roulette table retail investors of yesteryear. Yes, the speculative element in SPACs has been very  much in evidence over the past 18 months, but greater involvement from well established institutional investors/sponsors in the most recent SPAC wave and the prospect of more intense regulatory scrutiny following several high profile investment debacles in the past 18 months will hopefully see this investment class evolve towards greater emphasis on quality rather than quantity. As of today there remains a lot of liquidity chasing SPACs with capital searching for deals. As of today there are 305 pending IPOs, 574 active SPACs of which 425  still need to find companies with which to merge.While there is certainly a lot of chaff in the SPAC investment space, there are also hidden gems  to be uncovered. Not uncommon in thematic oriented investments, when in fashion, the rising tide raises all ships, whether seaworthy or not. By the same token, when enthusiasm wanes, even the better quality companies can get caught up in the sell-off. This is more so in an investment category where there is still limited research coverage.  Judging from the job postings we have seen, investment banks  and hedge funds are looking to build out their SPAC research capabilities, but the current dearth of quality sell-side coverage of the 100s of active SPACs creates an opportunity for those willing to put in the required research/due-diligence effort to discover potentially lucrative undervalued  businesses.In this respect,  the simple formula we would follow is to hone in on SPACs with good sponsors backed up by a strong track record, either in the process of executing an Initial Business Combination (IBC) or having recently completed business combination with a company with a fundamentally sound business and strategy, preferably supported by an established operating track record that is already delivering revenues and profitability. There may be a number of other hidden gems to uncover within the SPAC universe, in this insight, we highlight one example of a recently completed business combination which has caught our eye - <a href="https://www.smartkarma.com/entities/alight-inc" target="_blank" data-smartkarma-citation="entities:27940:1" rel="noopener">Alight Inc (ALIT US)</a> which we believe ticks all the aforementioned boxes.

Back in September 2020, amid a boom in SPAC investing that had never been seen before and against the backdrop of profitless companies (and in some cases years from actual revenue generation) being propelled to insane valuations , we published an insight effectively warning investors to be very wary and selective (cf. MergerTalk: SPACs May Have Become The Hot New Trend, But SPAC Investment Requires A Health Warning. Read more: https://skr.ma/JNmvg ). The fresh supply of SPAC IPOs in the US keeps on coming -the number of completed SPAC IPOs so far this year has already eclipsed the record total set for all of 2020 by 51% (374 vs 248)  and is well on target to surpass the number of traditional IPOs in the US for the second year running - in  2020, there were a total of 227 traditional IPOs with that number standing at 157 so far this year, well behind SPAC IPOs. In 2020, SPACs raised more cash ($83BN) than the total amount raised  over the preceding 17 years. So far in 2021, the cash raised from SPAC IPOs is already approaching 40% higher than 2021 at $114BN.However, these stats do not disguise the fact that the enthusiasm for SPACs has cooled  since mid-February. A snapshot reflection of this change in mood is the performance of the first 3 SPAC ETFs introduced to the market which began with SPAK at the beginning of October 2020.The average size of SPAC IPOs this year is 9% lower at $305MN than last year's ~$336MN. Perhaps more revealing, out of a total of 152 SPACs total that have announced business combinations and are in the process of de-SPACing, 92 (i.e., 61%) are trading below the SPAC IPO price of $10.  Of the 134 SPAC business combinations completed around one half are currently trading above the  SPAC IPO price, and many of those well below their post-merger highs.As our November insight indicates, we have been somewhat skeptical of the SPAC investment space. We believe that much of the SPAC investment frenzy witnessed in the past 18 months has was driven by  thematic interest over the more diligent scrutiny of the business combination.The observation is that not all SPAC mergers are created equal and that the majority are prone to value destruction.  It appears that SPAC investors are most excited about transactions in “emerging” trends such as green mobility or pandemic resistant areas such as online gaming and packaged/healthy foods rather than companies with a solid fundamental track record of revenue generation and profitability.Source: MergerTalk: SPACs May Have Become The Hot New Trend, But SPAC Investment Requires A Health Warning, November 2020We are not suggesting for one moment that SPAC investing is a passing fad. The SPAC investing community is a far cry from the predominantly roulette table retail investors of yesteryear. Yes, the speculative element in SPACs has been very  much in evidence over the past 18 months, but greater involvement from well established institutional investors/sponsors in the most recent SPAC wave and the prospect of more intense regulatory scrutiny following several high profile investment debacles in the past 18 months will hopefully see this investment class evolve towards greater emphasis on quality rather than quantity. As of today there remains a lot of liquidity chasing SPACs with capital searching for deals. As of today there are 305 pending IPOs, 574 active SPACs of which 425  still need to find companies with which to merge.While there is certainly a lot of chaff in the SPAC investment space, there are also hidden gems  to be uncovered. Not uncommon in thematic oriented investments, when in fashion, the rising tide raises all ships, whether seaworthy or not. By the same token, when enthusiasm wanes, even the better quality companies can get caught up in the sell-off. This is more so in an investment category where there is still limited research coverage.  Judging from the job postings we have seen, investment banks  and hedge funds are looking to build out their SPAC research capabilities, but the current dearth of quality sell-side coverage of the 100s of active SPACs creates an opportunity for those willing to put in the required research/due-diligence effort to discover potentially lucrative undervalued  businesses.In this respect,  the simple formula we would follow is to hone in on SPACs with good sponsors backed up by a strong track record, either in the process of executing an Initial Business Combination (IBC) or having recently completed business combination with a company with a fundamentally sound business and strategy, preferably supported by an established operating track record that is already delivering revenues and profitability. There may be a number of other hidden gems to uncover within the SPAC universe, in this insight, we highlight one example of a recently completed business combination which has caught our eye - Alight Inc (ALIT US) which we believe ticks all the aforementioned boxes.

SPACTalk: Shining ALIGHT On The Process Of Separating the Wheat From The Chaff In The SPAC Space

Japan Specialist

Mark Chadwick

Equity Bottom-Up

A wrong hire, skills mismatch, and inadequate training equals low efficiency and lost productivity. Companies pay a significant price for not correctly managing talent. It does not stop there. Low transparency, missed opportunities, and weak management lead to frustration and dissatisfaction for employees. The result is a lack of motivation and employee exits. Both companies and employees suffer when talent is not adequately managed. Companies can scarcely afford to lose or misallocate the right people as the costs are enormous - lost productivity, lost business, and a dysfunctional environment that hurts from the top to bottom line. Talent management plays a critical role in the modern company, and in many cases, it can mean the difference between a successful culture and going out of business. Enter <a href="https://www.smartkarma.com/entities/kaonavi-inc" target="_blank" data-smartkarma-citation="entities:29703:1" rel="noopener">Kaonavi Inc (4435 JP)</a> 
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/166/617/original/image_9811369031603321138858.png?1603321148" class="editor-image img-responsive" data-smartkarma-image-id="166617"></figure>

A wrong hire, skills mismatch, and inadequate training equals low efficiency and lost productivity. Companies pay a significant price for not correctly managing talent. It does not stop there. Low transparency, missed opportunities, and weak management lead to frustration and dissatisfaction for employees. The result is a lack of motivation and employee exits. Both companies and employees suffer when talent is not adequately managed. Companies can scarcely afford to lose or misallocate the right people as the costs are enormous - lost productivity, lost business, and a dysfunctional environment that hurts from the top to bottom line. Talent management plays a critical role in the modern company, and in many cases, it can mean the difference between a successful culture and going out of business. Enter Kaonavi Inc (4435 JP) 


Small Cap Growth: Kaonavi (4435) – Turning Talent into Teams

United States

Automatic Data Processing, Inc. is a global provider of business outsourcing solutions.  The Company's services include a wide range of human resource, payroll, tax and benefits administration solutions.  Automatic Data also provides solutions to auto, truck, motorcycle, marine and recreational vehicle dealers.

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Automatic Data Processing (ADP US)

Automatic Data Processing Inc: Financial & Price Forecasts

Automatic Data Processing had a strong start to the year, with revenue growth of 10% and margin expansion of 140 basis points with respect to its...

Baptista Research

Automatic Data Processing (ADP): Why Is This HR Tech Player Soaring To New Highs? (12/2021)

Automatic Data Processing delivered a solid start to the new financial year with revenue growth of 10% and margin expansion of 140 basis points,...

Baptista Research

Automatic Data Processing - Investment Thesis

Automatic Data Processing (ADP) reported yet another all-around beat backed by strong new business bookings. The company’s leading Human Capital...

Baptista Research

SPACTalk: Shining ALIGHT On The Process Of Separating the Wheat From The Chaff In The SPAC Space

While there is certainly a lot of chaff among SPACs/De-SPACs, there are also hidden gems to be discovered. We believe the recently completed De...

Robert Sassoon

Small Cap Growth: Kaonavi (4435) – Turning Talent into Teams

Talent management plays a critical role in the modern company, and in many cases, it can mean the difference between a successful culture and going...

Mark Chadwick

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