Covering IPOs, Healthcare and Technology Stocks

Andrei Zakharov

Algosun Global

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/freshworks-inc" target="_blank" data-smartkarma-citation="entities:34147:1" rel="noopener">Freshworks (FRSH US)</a>  shares underperformed in 2022, with shares down ~47% YTD versus a 33% loss on the Nasdaq Composite. US software stocks lost ~51% on average over the year. </li>
<li>Insiders keep buying shares. VC firm Accel, a 5%+ shareholder, acquired ~$50 million worth of <a href="https://www.smartkarma.com/entities/freshworks-inc" target="_blank" data-smartkarma-citation="entities:34147:1" rel="noopener">Freshworks (FRSH US)</a>  shares in 2H22. Strong insider buying indicates the stock could hit bottom. </li>
<li>We estimate <a href="https://www.smartkarma.com/entities/freshworks-inc" target="_blank" data-smartkarma-citation="entities:34147:1" rel="noopener">Freshworks (FRSH US)</a>  crossed the $500M ARR mark in 3QCY22. The company may report strong 4QCY22 results and surprise investors and analysts.</li>
</ul>



Freshworks (FRSH US)  shares underperformed in 2022, with shares down ~47% YTD versus a 33% loss on the Nasdaq Composite. US software stocks lost ~51% on average over the year. 
Insiders keep buying shares. VC firm Accel, a 5%+ shareholder, acquired ~$50 million worth of Freshworks (FRSH US)  shares in 2H22. Strong insider buying indicates the stock could hit bottom. 
We estimate Freshworks (FRSH US)  crossed the $500M ARR mark in 3QCY22. The company may report strong 4QCY22 results and surprise investors and analysts.


Freshworks: Insiders Keep Buying Shares. Path To Sustainable FCF Positive Business Looks Clear

<ul>
<li>We are moving our PT to $26 by applying a 14x multiple to CY22 revenue estimate of $491M, which we believe is fair given lower implied CY22 growth. </li>
<li>Freshworks has resolved the litigation filed by Zoho Corporation regarding trade secret misappropriation against Freshworks, eliminating key risk factor for investors.</li>
<li>Freshworks crossed the $400M ARR mark in the quarter ended Dec-21, and quarterly revenue exceeded $100M for the first time. </li>
</ul>


We are moving our PT to $26 by applying a 14x multiple to CY22 revenue estimate of $491M, which we believe is fair given lower implied CY22 growth. 
Freshworks has resolved the litigation filed by Zoho Corporation regarding trade secret misappropriation against Freshworks, eliminating key risk factor for investors.
Freshworks crossed the $400M ARR mark in the quarter ended Dec-21, and quarterly revenue exceeded $100M for the first time. 


Freshworks: Six Months Post-IPO. Valuation Update

Global TMT Analyst, Ex-PM, 30 years experience

Neil Campling

Thematic (Sector/Industry)

<ul>
<li>
<a href="https://www.smartkarma.com/entities/apple-inc" target="_blank" data-smartkarma-citation="entities:666:1" rel="noopener">Apple (AAPL US)</a> iPhone event 'boring', lacks innovation, pushes tech improvements out to 2025. Consumers' reaction? "Meh"</li>
<li>
<a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">Samsung Electronics (005930 KS)</a> Samsung's AI products are only at 30% of consumers' expectations. Meanwhile <a href="https://www.smartkarma.com/entities/huawei-technologies-co-ltd" target="_blank" data-smartkarma-citation="entities:8231:1" rel="noopener">Huawei Technology (40978Z CH)</a> Mate XT takes technology to a new level </li>
<li>Electric Vehicles backlash to regulations mirror setbacks for OEMs. <a href="https://www.smartkarma.com/entities/toyota-motor-corp" target="_blank" data-smartkarma-citation="entities:73:1" rel="noopener">Toyota Motor (7203 JP)</a> positioned to win</li>
</ul>



Apple (AAPL US) iPhone event 'boring', lacks innovation, pushes tech improvements out to 2025. Consumers' reaction? "Meh"

Samsung Electronics (005930 KS) Samsung's AI products are only at 30% of consumers' expectations. Meanwhile Huawei Technology (40978Z CH) Mate XT takes technology to a new level 
Electric Vehicles backlash to regulations mirror setbacks for OEMs. Toyota Motor (7203 JP) positioned to win


Tech Daily. Apple (Boring), Huawei (Wow), Samsung, AI, EVs in Focus

<ul>
<li>Activist hedge fund Jana Partners bought ~2.66M <a href="https://www.smartkarma.com/entities/new-relic-inc" target="_blank" data-smartkarma-citation="entities:16283:1" rel="noopener">New Relic Inc (NEWR US)</a>  shares in 2Q22 and upped its stake in the tech company to 5.3%.</li>
<li>According to Reuters, New Relic may explore a potential sale following interest from private equity firms. Mr. Galligan, a partner of Jana Partners, joined the New Relic Board in June. </li>
<li>New Relic shares trade at ~4x EV/Rev on our FY23 revenue estimate, and we think Splunk may set a ceiling on the multiple at which New Relic may be acquired. </li>
</ul>


Activist hedge fund Jana Partners bought ~2.66M New Relic Inc (NEWR US)  shares in 2Q22 and upped its stake in the tech company to 5.3%.
According to Reuters, New Relic may explore a potential sale following interest from private equity firms. Mr. Galligan, a partner of Jana Partners, joined the New Relic Board in June. 
New Relic shares trade at ~4x EV/Rev on our FY23 revenue estimate, and we think Splunk may set a ceiling on the multiple at which New Relic may be acquired. 


Will Jana Partners Have Success In Pushing New Relic For A Sale?

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

<ul><li>Zendesk had a solid 2021 and saw a staggering 32% top-line growth in the last quarter with revenue of $375 million.</li><li>The company’s total annual revenue of $1.34 billion was also 30% above 2020 levels exceeding Wall Street expectations.</li><li>Customer accounts with annual recurring revenue of more than $250,000 now account for 38% of the company's total annual recurring revenue which is an excellent update.</li></ul>

Zendesk had a solid 2021 and saw a staggering 32% top-line growth in the last quarter with revenue of $375 million.The company’s total annual revenue of $1.34 billion was also 30% above 2020 levels exceeding Wall Street expectations.Customer accounts with annual recurring revenue of more than $250,000 now account for 38% of the company's total annual recurring revenue which is an excellent update.

United States

Zendesk, Inc. provides web-based help desk software with customer support platform. The Company offers applications that allow clients to manage incoming support requests from end customers from any internet connected computer. Zendesk serves customers in the United States.

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Zendesk Inc (ZEN US)

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Freshworks: Insiders Keep Buying Shares. Path To Sustainable FCF Positive Business Looks Clear

Strong insider buying and a recent buyout of Zendesk may indicate a bottom for Freshworks shares as valuations have improved. Freshworks...

Andrei Zakharov

Freshworks: Six Months Post-IPO. Valuation Update

Our new price target of $26 (vs. prior $47) is based on relative value methodology and implies ~39% upside, what is below IPO price of $36 per share

Andrei Zakharov

Tech Daily. Apple (Boring), Huawei (Wow), Samsung, AI, EVs in Focus

​Apple iPhone event boring, profit taking due to valuation. Huawei event the opposite, huge tech advances. Samsung AI products fall short of...

Neil Campling

Will Jana Partners Have Success In Pushing New Relic For A Sale?

Our analysis suggests that New Relic may be acquired with a premium of 30%-40% vs. current levels, and Jana Partners will succeed by pushing New...

Andrei Zakharov

Zendesk Inc.: Investment Thesis

Zendesk had a solid 2021 and saw a staggering 32% top-line growth in the last quarter with revenue of $375 million. The company’s total annual...

Baptista Research

Apple iPhone event boring, profit taking due to valuation. Huawei event the opposite, huge tech advances. Samsung AI products fall short of...