United States

• Hollysys Automation Technologies (HOLI US) update notes a new MBO proposal at US$25 per share, a bidders shortlist in several weeks and an update on the special meeting. 
• The update suggests several potential bidders and enough shareholders with the required record date to convene the special meeting to appoint independent directors. 
• The MBO proposal, while potentially a delaying tactic, suggests that the Board are under pressure for a solution and is aiming for a friendly takeover. 

• When EOFlow (294090 KS) was suspended on the 11th October, and ceased global sales, either the Medtronic (MDT US) deal was (largely) toast; or it was a tactical move. 
• I’m firmly in the latter camp. Insulet‘s lawsuit was expected. And completing the transaction enables the more financially and legally resource-rich MDT to become the party to the litigation.
• The SPA between Jesse Kim and MDT was expected to complete on 25 October. That was not a hard date. It has now been pushed out to 3 January 2024. 

• Crypto prices are still tracking our expected cycle trend, and the next big test is whether we see another period of consolidation — or if the breakout is finally near.
• We outline a few notable risks in the near term that may stand in the way of the next crypto uptrend: stagnant liquidity, buyer exhaustion, further tightening in financial conditions
• We don’t see these risks as long-term trends and view any downside volatility as an opportunity to increase exposure to the best assets at even better entry prices.

SIGA Technologies has announced the formation by the European Commission of a joint procurement mechanism to source oral TPOXX initially involves 13 countries and is open to all countries in the EU and European Free Trade Association (EFTA). This is in anticipation of an initial $18m order of TPOXX in the next 60 days from EU/EFTA member countries; As such, management expects total (global) orders of $164m in FY23. This development allows participating EU/EFTA member countries to acquire courses of oral TPOXX in the near term and efficiently order additional quantities, provided the minimum quantity thresholds are met. While we expect the company’s near-term (H223 and FY24) revenues to be dominated by the replenishment of US government stockpiles, the announced European joint procurement mechanism establishes an important gateway to access an important market and creates longer-term upside revenue potential. Management maintains its FY23 pre-tax operating income guidance of $90–100m.

• Tesla’s Q3 10-Q reveals CFO Zach Kirkhorn was suddenly out because he was fired.
• The company also made Kirkhorn reveal any whistleblower efforts he pursued—and then declare Tesla broke no laws. Tesla threatened “legal action” if he talks to the press. 
• Is Tesla setting up its ex-CFO to take a fall?

• Rising geopolitical tensions have driven gold prices 9% higher over the last 2 weeks. Risk of escalation provides further upside to gold prices. 
• Gold is trading at a key psychological price level of $2,000/oz with a bullish momentum. Previous rallies were rejected from the price level of $2,100/oz.
• Consumption is expected to rise in India and China due to higher seasonal consumption in India and fading domestic premium in China. But, higher prices remain a drag.

• Equities not yet out of the woods, but as long as SPX is above 4165-4200, most signs point to this being a normal pullback within the ongoing bullish SPX trend.
• Similarly, the Nasdaq 100 (QQQ) is testing support at $350-$355 (the 4-month bull flag/falling wedge pattern). The Russell 2000 is also approaching 1+ year support at 1640.
• Breakdowns would be our cue to get defensive, as it would likely lead to precipitous declines. However, if supports hold, this is where risk/reward is skewed in favor of buyers.

• Waystar Holding will be valued like other unprofitable healthcare IT unicorns on a multiple of forward revenue. I used EV/Revenue valuation methodology and FY23 EV/Revenue multiples to value the Waystar. 
• In 2019, CPPIB and EQT acquired a majority stake in Waystar, valuing the company at $2.7B, which implies an EV/FY23E revenue multiple of ~ 6x, including a debt of ~$2.3B. 
• My ~$3.6B IPO valuation contemplates a ~5x EV/Revenue on my FY23E revenue of $795M and is supported by my analysis of healthcare IT comps. 

• Q323 revenues of $3.48 billion, ahead of guidance and up 8.6% sequentially
• December quarter guidance of $3.7 billion at the midpoint suggests ongoing recovery
• However, still-declining services revenue indicates that all other headwinds remain in place

• Waystar Holding, a cloud-based technology company and healthcare RCM solution provider, filed for a $100M placeholder IPO.
• Founded in 2017 through the merger of two healthcare firms, ZirMed and Navicure, Waystar Holding provides mission-critical cloud software to healthcare organizations in the United States. 
• The company has ~$2.3B of outstanding borrowings and plans to use net proceeds from an upcoming IPO to repay outstanding indebtedness under credit facilities. 

• In 3Q23, Intuitive Surgical (ISRG US) recorded 12% YoY revenue growth to $1.74B, driven by growth in da Vinci procedure volume and an increase in the installed base of systems.
• 3Q23 procedure growth was 19%, versus 20% in 3Q22 and 22% in 2Q23. Systems revenue declined 11%, due to higher number of systems placed under lease and lower China demand.
• The company now expects 2023 procedure volume growth of 21–22%, up from previous estimates of 20–22%. Significant material supply chain disruptions or hospital capacity constraints are not expected.

• IRDM used its third quarter results as means to update investors on where operating EBITDA would end up for 2023 and the continued progress with direct to device
• IRDM reported quarterly results missing our estimates due to a larger than expected decline in equipment revenue. 
• The Qualcomm (QCOM) partnership is poised to emerge as the most significant catalyst for 2024

• Previous price increases by WD-40 Company (WDFC) led to the Company reporting a year over year increase in quarterly revenue, but with those prices increases being lapped in fiscal 2024
• WDFC was able to reduce its inventory level in the quarter, but unit volume growth remains elusive. Higher operating expenses are expected to prevent earnings growth in fiscal 2024
• WDFC reported fiscal fourth quarter sales of $140.5 million compared to $141.7 million achieved in fiscal third quarter.

• Boeing is a globally recognized company in the aerospace industry that was founded in 1916 by William Boeing.
• The company’s business model includes three segments: commercial, defense, and services, with the commercial segment being the largest, accounting for nearly 40% of its revenues.
• Boeing has played a crucial role in the evolution of the aviation industry, from fabric airplanes to carbon fiber composite jetliners that can fly long distances without stopping.

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• There has been little change in day rates since Seadrill (SDRL) reported second quarter results with the Company having two vessels with contracts expiring next month
• The only news flow since SDRL reported second quarter results has been about the Company regularly buying back stock
• The two vessels with contracts expiring are currently in different geographies

• Our Taiwan AI stock short basket of Quanta, Wistron, Gold Circuit, and Asia Vital has underperformed Nvidia by 12.5% since our previous piece.
• Most of Taiwan’s AI stock plays have underperformed Nvidia over the same period, but by less than our basket names. Analyst recommendations remain overwhelmingly Buy for our Short basket names.
• Conclusion: Maintain Quanta, Wistron, Gold Circuit, Asia Vital as a Short Basket vs. Long Nvidia. Nvidia revenue will grow at a higher percentage rate than most Taiwan AI concept stocks.

• Expectations since late-September remain unchanged; if $SPX is above 4165-4200/200-day MA, we’re bullish, as most signs point to this being a normal pullback within the ongoing bullish trend in SPX.
• As discussed last week (10/11/23), we have growing confidence that lows are likely in on the SPX, which made a low at 4216 (with 4200 hit exactly overnight 10/4/23).
• We also discussed Russell 2000 breadth bottoming last week, and this has continued with bullish breadth divergences on Russell 2000 % of stocks above their 50- and 200-day MAs

• Post-Close Friday it was announced that Light & Wonder (LNW AU) Chess Depositary Interests would replace United Malt Group Ltd (UMG AU) at the close on 17 October.
• This was announced before US markets opened. Light & Wonder (LNW US) shares popped 5.65%, closing 5.8% through the Aussie line.
• This is a possibly deceptive index add. I’d be quite careful. 

• WFC is seeing net interest income growth rate decelerate sharply from 29% YoY in 2Q23 to 8% YoY in 3Q23. Its deposit costs rose from 23bps to 192bps YoY
• CRE NCO’s rose to USD93m in 3Q23 from reversals in 3Q22. Its CRE non-accruals rose to USD3,863m in 3Q23, vs USD2,507m in 2Q23, vs USD853m in 3Q22
• Mortgage, Auto, CRE loans are down QoQ and YoY. C&I loans, its largest loan bucket are down 0.9% QoQ. Total gross loans declined USD5.5bn QoQ, now down USD13bn from peak.

• The U.S. Big 3 banks delivered strong 3Q23 earnings on the back of record net interest income, despite a lower balance in commercial loans and residential mortgages.
• Credit quality is mostly steady, with credit card charge-offs normalized. The main pain point is in CRE, especially for WFC. 
• The proposed Basel III end game, if materialized, could have a huge impact on JPM and Citigroup in particular.

• Braze, a leading customer engagement cloud-based platform provider, outperformed its key competitors, Adobe and Salesforce, on a year-to-date basis. 
• Braze shares massively outperformed, with shares up ~67% over the year versus a ~28% gain on the NASDAQ. However, the stock is still below the IPO price of $65/share. 
• Reported y/y revenue growth has decelerated from 58% in FY22 to 49% in FY23, and management has guided ~27% y/y revenue growth in FY24. 

• Shareholders have approved United Malt Group Ltd (UMG AU)‘s acquisition by Malteries Soufflet and UMG is expected to stop trading after the close on 17 October. 
• United Malt Group Ltd (UMG AU) will be replaced by Light & Wonder (LNW AU) in the S&P/ASX 200 (AS51 INDEX) at the close on 17 October.
• This is a surprise and there is unlikely to be a lot of pre-positioning on Light & Wonder (LNW AU). Buy Light & Wonder (LNW US) during US hours.

• Pulsar Helium (PLSR CN)C; target price of C$0.90 per share: Additional acreage should increase the size of the prize – Pulsar has signed a lease with a private mineral rights holder to expand the area of the company’s Topaz helium project.
• The additional mineral rights are within a 6.2 mile radius of the Topaz discovery and cover a total of 2,840 gross acres (1,049 net acres).
• OMV (OMV AG): 3Q23 update – 3Q23 production was 364 mboe/d.

• If you’re an investor in any firm with some form of dominance in US markets, then you need to know who Ms Lina Khan is.
• Corporate misbehavior is a topic of her interest. She shows zero tolerance towards large corporations who wield outsized market power.
• FTC along with 17 US states filed a lawsuit against Amazon for illegally maintaining monopoly power. How will Amazon be impacted?

• Tesla Inc. will have to sell a record number of cars in the fourth quarter to reach its goal for the year after third-quarter deliveries declined.
• The electric-car maker produced 430,488 vehicles in the third quarter, down 10% from the second, and delivered 435,059 units, down 6.7%, Tesla said Monday.
• The drop in deliveries resulted from production stoppages at its factory in Fremont, California. Tesla CEO Elon Musk said in July that production facilities would be closed at various times in the third quarter to perform plant upgrades.

• RingCentral Inc. managed to surpass the revenue expectations as well as the earnings expectations of Wall Street.
• The profit increase also resulted in another quarter of significant free cash flow.
• Revenue from subscriptions increased 11% year over year to $514 million.

• Plug Power Inc. delivered a mixed set of results for the quarter, with revenues above the analyst consensus.
• Plug’s second quarter results show significant growth in a number of its recently introduced goods, especially in its cryogenic industry, which generated $69 million in revenue in the quarter, more than a threefold increase over the same period last year.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

• Digital Turbine, Inc. delivered mixed results for the previous quarter, with revenues above the analyst consensus.
• With $146.4 million in revenue, $27 million in EBITDA, and non-GAAP earnings per share of $0.18, the company demonstrated significant improvement compared to the previous quarter.
• Continuing the multi-year partnership will enhance Digital Turbine’s rate of innovation and expand its scale to a greater extent.

• Levi Strauss & Co. delivered a mixed set of results for the quarter, with revenues well below analyst expectations but managed earnings beat.
• Despite facing headwinds, reported revenues remained steady compared to the previous year and decreased by 2% on a constant currency basis.
• Their Brands segment, consisting of Dockers and Beyond Yoga, is performing impressively, generating nearly $0.5 billion in annual revenue.

• Sunrun Inc. delivered mixed results in the quarter, with revenues below analysts’ anticipations but above-par earnings.
• In Q2, Sunrun added more than 100 megawatt hours of storage capacity, up 35% over the same quarter last year.
• With a net subscriber value of $12,321 in the quarter, subscriber value was roughly 44,700, and creation cost was approximately $32,400.

• Lumentum Holdings Inc. surpassed the revenue expectations as well as the earnings expectations of Wall Street.
• Despite inventory challenges in the second half of fiscal year ’23, the company achieved a 3% increase in full-year revenue from fiscal year ’22.
• While fiscal 2024 3D sensing revenue is projected to be lower than fiscal ’23 due to market dynamics and competition, the company achieved sequential growth in Commercial lasers revenue, driven by applications in solar cell processing.

• FedEx Corporation delivered a mixed set of results for the previous quarter, with revenues below the analyst consensus.
• The company’s transformation efforts are already reaping the rewards, notably in the Ground segment, which saw increased revenue due to higher yields and exceptional operational performance.
• The transformative DRIVE initiative is progressing as planned, with substantial cost reductions achieved across the network.

• Broadridge delivered a mixed set of results for the previous quarter, with revenues well below analyst expectations, but managed an earnings beat.
• The company reported an 8% growth in recurring revenue, with impressive earnings growth of 21%.
• The company’s guidance for fiscal ’24 predicts organic recurring revenue growth of 6% to 9%, adjusted EPS growth of 8% to 12%, and an approximate 100% free cash flow conversion.