Oatly Group AB American Depositary Shares

Oatly Group AB American Depositary Shares (Nasdaq: OTLY) develops and markets oat drink. It brand, Oatly is available in 20 countries globally.

Investment Rationale – WATCH at USD 25.80

• It has a history of losses and not able to sustain profitability. The Covid-19 restrictions worsened the financial condition.
• Due to losses and negative cash flow from operations, the Company might need additional funding to pursue growth opportunities.
• From a technical standpoint, OTLY’s stock price is trading close to the upper standard deviation of the Bollinger Bands. Meanwhile, 14-day RSI (60.14) giving an overbought signal at the current levels.
• It operates in a highly competitive market which is exposed to pricing pressure. Hence, profitability margins can be further impacted.

Risk Assessments

• The overdependence on limited suppliers of oats can adversely impact the business.
• The Group has a history of losses and exposed to liquidity risk amid uncertain outlook scenarios.

Recent News

IPO: On 19 May 2021, Oatly Group announced an initial public offer at a public offering price of US$17.00 per American Depositary Shares.

Financial Highlights for the quarter ended 31 March 2021 (as on 21 May 2021)

 (Source: Company Website)

• For Q1 FY21, Oatly reported a 66.2% year-on-year increase in revenue. Meanwhile, the gross margin stood at 29.9%.
• However, the Company reported a loss of US$32.4 million, reflecting continued investment in product development, brand awareness, and investment in production.
• Liquidity: As of 31 March 2021, the Company had access to US$88.6 million of cash and cash equivalents, reflecting a decreased position from FY20 end.

Share Price Chart

 (Analysis done by Kalkine Group)

Conclusion

Any delay in production capacity due to Covid-19 led restrictions can aggravate losses and the Company might fail to compete in the highly competitive market. Moreover, the logistic challenges could also result in lost sales. The Company has been investing heavily to ramp up new facilities through external financing, the business could suffer if it fails to attract substantial demand. Moreover, inflationary pressure and loss of customers due to changing market trends can impact business prospects. The stock made a 52 week High and Low of USD 29.00 and USD 19.99, respectively.

Based on the loss-making history, economic instability, global pricing pressure, and fluctuation in results, uncertain outlook, we have given a “WATCH” stance on Oatly Group AB (publ) at the closing price of USD 25.80 (as on 22 June 2021), while we look forward to reviewing the global appetite for its products.

Ocugen Inc

Ocugen Inc (Nasdaq: OCGN) is a biopharmaceutical entity focused on gene therapies to cure blindness diseases. It is also developing a Covid-19 vaccine.

Investment Rationale – WATCH at USD 7.41

• Ocugen does not generate any revenue yet, while its losses widened in Q1 FY21 year-on-year, due to higher operating expenses.
• The Securities Fraud Law Firm, Glancy Prongay & Murray LLP has commenced an investigation on behalf of Ocugen’s investors for the possible violations of the federal securities laws. It can lead to reputational damage.
• From a technical standpoint, 20-day EMA (GBX 7.72) is sustaining above the current market price, reflecting a bearing momentum. Meanwhile, the 14-day RSI (46.17) is also in neutral territory.
• Over the past month, OCGN’s stock price has fallen ~6.9%, reflecting underperformance against the benchmark Nasdaq composite index.

Risk Assessments

• The recent lawsuit issued for the misleading information can dampen the investor sentiments, while the stock has already yielded an exceptional return of over 3,000% in one year.
• The uncertainties regarding clinical results, performance of key performance partners, and pricing strategy can aggravate losses.

Recent News

Management Change: On 21 June 2021, Ocugen appointed Ken Inchausti as Head, Investor Relations & Communications.

Financial Highlights for the quarter ended 31 March 2021 (as on 7 May 2021)

 (Source: Company Website)

• Ocugen demonstarted 100% efficacy of Covaxin against the Covid-19 disease.
• Through a registered direct offering of common stock, it raised US$100.0 million in gross proceeds.
• As of 31 March 2021, Ocugen reported US$44.9 million in cash and cash equivalents, compared to US$24.2 million as of December 31, 2020.

Share Price Chart

 (Analysis done by Kalkine Group)

Conclusion

Recently on 15 June 2021, it has partnered with Jubilant HollisterStier for the commercial manufacturing of COVAXIN™ for Canadian and the US markets. Covaxin has been getting used in India for emergency use, while the Company is evaluating its commercialization in the United States as well. However, it estimates that future revenue and capital requirements are still uncertain, while the Company has incurred hefty R&D costs. Moreover, a lawsuit has been filed against the Company recently, which can cause significant reputational damage. The stock made a 52 week High and Low of USD 18.77 and USD 0.185, respectively.

Based on the absence of revenue, worsened losses, and macroeconomic uncertainties, we have given a “WATCH” stance on Ocugen Inc at the closing price of USD 7.41 (as on 22 June 2021), while we look forward to its reviewing regulatory submissions to the FDA and Health Canada.

*The reference data in this report has been partly sourced from REFINITIV.