In today’s briefing:
- Meta Platforms: Even More Bullish
- Salesforce.com’s Upcoming Earnings: 3 Things You Need To Know
- A Real Dividend Grower
- The Highlights of USDAs 2023 Commodity Outlook // Where Stock Prices Are Headed in 2023
- ACCO: Restructuring the Cash Machine
- Gracell Biotechnologies Inc (GRCL.US) – The Overall Outlook for CAR T Therapy Is Highly Uncertain
- SHEN: Slower Adds from a Larger Network
- Sporting Crypto – 27th Feb 2023: Are NBA Top Shots Securities?
- ADEA: Signing Deals and Generating Cash
- IMMR: Sense the Value
Meta Platforms: Even More Bullish
- The recently announced Meta Verified could generate an incremental $2.2B in revenues.
- Incremental layoffs being reported could amount to $5B in incremental savings this year.
- Between the two reports, we could easily see 10% upside to EPS.
Salesforce.com’s Upcoming Earnings: 3 Things You Need To Know
- Share buybacks and stock-based compensation also will be an important part of the upcoming earnings release.
- GAAP operating profitability will be in the spotlight as the company lays off a significant amount of its workforce.
- The level of share buybacks will be a key part of Salesforce’s growth strategy.
A Real Dividend Grower
- One of top three global industrial gas suppliers well positioned to capitalise on renewables growth like hydrogen
- Unbroken history of annual dividend increases for the past 40 years
- Risks include execution hiccups and cost overruns
The Highlights of USDAs 2023 Commodity Outlook // Where Stock Prices Are Headed in 2023
- The agency estimates that roughly 46% of Ukraine’s wheat production lies in areas where the war is currently threatening the planting process.
- US Soybean Crush Margin remains very high and therefore continues to support soybean meal prices
- USDA is expecting a larger uptick in planted acres for Wheat and Rice but a large drop in planted acres for Cotton.
ACCO: Restructuring the Cash Machine
- ACCO affirmed our industry concerns when it reported fourth quarter results that were lower than consensus estimates and resulted in free cash flow falling shy of the Company’s forecasts.
- ACCO has a business that can generate significant amount of free cash flow the second half of each year depending on how much volume it can sell
- ACCO is undertaking a restructuring effort to improve efficiencies to generate greater free cash flow from a tougher retail environment.
Gracell Biotechnologies Inc (GRCL.US) – The Overall Outlook for CAR T Therapy Is Highly Uncertain
- Although the pipeline has characteristics, Gracell’s R&D progress cannot catch up with the speed of the transformation of global CGT investment climate. Its commercialization performance could be much lower than expected.
- There’s “practical obstacles” for the use of CAR-T, which cannot solve the actual clinical needs at this stage. Doctors would choose other solutions. So, the actual market space is small.
- Investors can do short-term trade when Gracell’s valuation is lower than peers, but due to the highly uncertain long-term prospects of this company, we do not recommend long-term hold.
SHEN: Slower Adds from a Larger Network
- SHEN reported better than expected fourth quarter revenue as more customers subscribe to faster broadband speeds
- Our focus is on the seasonally low number of customer additions in the quarter even though SHEN was building out its optical fiber network.
- Our negative bias has been built on SHEN’s capital expenditure plans requiring the Company to build debt and the timing of when SHEN would reach free cash flow positive
Sporting Crypto – 27th Feb 2023: Are NBA Top Shots Securities?
- Last week there were headlines from media publishers that read something along the lines of; NBA-Branded ‘Top Shot Moments’ NFTs May Be Securities, Judge Rules in Dapper Labs Case
- This brewed discourse around 1) Top Shots themselves being securities and 2) NFTs as a thing being securities.
- Both 1) and 2) are wrong in my opinion, for a variety of reasons.
ADEA: Signing Deals and Generating Cash
- ADEA managed to sign ten license agreements in the fourth quarter resulting in revenue growing. ADEA had indicated there were two deals that had spilled over into the fourth quarter
- ADEA’s management has yet to reach the comfort level of moving the annual baseline revenue higher, but the ongoing pipeline of potential license deal could push 2023 revenue above guidance
- ADEA reported fourth quarter revenue of $103.3 million compared to our estimate of $99.1 million. The increase in revenue resulted in adjusted EBITDA of $74.9 million
IMMR: Sense the Value
- IMMR sustained its quarterly revenue above $9 million even though the Company already had a seasonally high third quarter performance
- The broader use of haptics gave way to a diversified revenue stream in the fourth quarter
- IMMR added to its cash balance even though it used its cash balance to buyback more stock
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