In today’s briefing:
- Sea Ltd – Just About Doomed
- Evolution Gaming: The World’s Largest Casino, Which You Probably Never Heard Of
- PureTech Health (PRTC LN): Continued Value Unlocking; Multiple Catalysts Are Pushing Up Stock Price
- Salesforce.com Inc: Code Builder Update & Other Drivers
- Capri Holdings: Digital Momentum & Other Drivers
- Breaking Estimate Short Candidates: Upstart, Cerence, Zillow, Trex
- Campbell Soup Inc: Online Sales As A Key Driver & Other Factors Driving Growth
Sea Ltd – Just About Doomed
- It was reported yesterday that Sea Ltd (SE US)‘s e-commerce arm “Shopee” has begun rescinding job offers.
- Having burnt around $2.0bn during the first six months of 2022 pursuing e-commerce and fintech growth aspirations, this seems like an extreme measure to ensure the company’s survival.
- With the gaming profitability fading, we are starting to think that even the extreme cost-cutting could be insufficient to overturn Sea’s e-commerce and fintech cash burn.
Evolution Gaming: The World’s Largest Casino, Which You Probably Never Heard Of
- Although lesser-known, this Swedish company dominates one of the most lucrative segments of the global casino industry.
- In our view, it is probably the only investable casino company, and despite its size, still has a massive growth runway ahead.
- Our DCF model implies a 15%-20% total return for the company’s long-term shareholders.
PureTech Health (PRTC LN): Continued Value Unlocking; Multiple Catalysts Are Pushing Up Stock Price
- PureTech Health (PRTC LN) has raised approximately $115.4 million through partial offloading of stake in Karuna Therapeutics Inc (KRTX US). PureTech will continue to hold 3.5% of Karuna’s outstanding shares.
- Following the transactions, PureTech has updated guidance to extend its operational runway to Q1 2026 from prior cash runway guidance into Q1 2025.
- Karuna plans to submit a new drug application for KarXT in schizophrenia with the FDA in mid-2023. As a co-inventor of KarXT, PureTech has the right to receive royalty.
Salesforce.com Inc: Code Builder Update & Other Drivers
- Salesforce has generated excellent revenue growth, profitability, and cash flows in its last result, surpassing Wall Street expectations on all counts despite operating in a challenging financial climate.
- With new clients like the U.S.
- Department of Veterans Affairs, Workday, and Uber, Service Cloud grew 14% year over year or 18% in constant currency.
Capri Holdings: Digital Momentum & Other Drivers
- Capri has seen a decent performance across all three of its luxury residences and 2022 has been delivering better results than the management had anticipated.
- The company delivered an all-around beat with a revenue of $1.36 billion, which exceeded management and market expectations.
- Fendace combined unique features with classic silhouettes from two renowned Italian luxury brands, Fendi and Versace.
Breaking Estimate Short Candidates: Upstart, Cerence, Zillow, Trex
- This model finds companies facing recent sharp cuts in estimates. These shorts can have very disparate characteristics.
- The key judgement involves whether the negative revisions are temporary or if they are indications of ongoing weakness in the business.
- Breaking Estimates stocks often continue to decline after the cuts. This week we flag: Upstart, Cerence, Zillow, Trex
Campbell Soup Inc: Online Sales As A Key Driver & Other Factors Driving Growth
- The demand for Campbell’s portfolio of brands continued to be strong in the last quarter and it was able to match the market’s revenue expectations through its result.
- The company was able to deliver an earnings beat as it enhanced supply chain performance and put into place efficient revenue management to combat inflation.
- Their Win in Soup approach will remain strong in fiscal 2023 largely due to innovation.
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