AT&T Inc.

T Details

AT&T Inc. (NYSE: T) is a holding corporation that operates in the telecommunications, media, and technology industries worldwide through its subsidiaries and affiliates. Its business segments include 1) Communications, which includes the Mobility, Business, and Consumer Wireline business units in the United States and globally; 2) WarnerMedia, which produces and distributes films, television, gaming, and other content in both physical and digital formats globally; and 3) Latin America, which provides entertainment and wireless services in Latin America and the Caribbean (under Vrio) and Mexico. As of December 07, 2021, the company's market capitalization stood at USD 166.24 billion

Latest News:

• New Contract: The Defense Information Systems Agency selected AT&T for the Enterprise Infrastructure Solutions (EIS) Task Order to Modernize the United States Coast Guard's (USCG) Data Network on December 07, 2021. If all options are exercised, the deal with AT&T is worth USD 161 million over 11 years.
• Shareholder Updates: The company updated that the sustainability of its wireless momentum was attributed to several factors, including a rising share in previously underpenetrated segments of the market, improved customer experience, and its simplified and consistent go-to-market strategy UBS Global TMT Conference on December 06, 2021. In the future, the business expects its postpaid phone ARPU to remain stable at 2021 levels in 2022. Furthermore, the company is confident in its fiber construction strategy.

9MFY21 Results:

• Slight improvement in Revenues: Total operating revenues climbed 1.46% to USD 127.91 billion during 9MFY21 (ended September 30, 2021) from USD 126.07 billion during 9MFY20, owing to greater Mobility equipment and service revenues and gains in broadband service in its communications segment.
• Surge in Bottom Line: It witnessed an increase in net income to USD 16.09 billion during 9MFY21 from USD 9.69 billion reported during 9MFY20.
• Decent Balance Sheet: As of September 30, 2021, the company's cash and cash equivalents stood at USD 21.27 billion, with a total debt of USD 180.60 billion.

Key Risks:

• Spectrum Risk: Any potential changes to the electromagnetic spectrum currently used for broadcast television and satellite distribution by the Federal Communications Commission (FCC) could jeopardize WarnerMedia's ability to deliver linear network feeds of its domestic cable networks to its affiliates, which might, in turn, affect its financial strength and cash flows.

Outlook:

• FY21 Estimates: The company indicated in its Q3FY21 press release that it anticipates FY21 EPS to grow at the high end of the low- to the mid-single-digit range and that it is on pace to meet its free cash flow target of USD 26 billion. The business aims to exceed the 70-73 million HBO Max/HBO global subscription target set for FY21.

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation

(Analysis by Kalkine Group)

• % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

T Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

AT&T's share price has fallen 22.09% in the past nine months and is currently leaning towards the lower-band of the 52-week range of USD 22.22 to USD 33.88. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 36.26. We have valued the stock using the EV/EBITDA-based relative valuation methodology and arrived at a target price of USD 30.00.

Considering the company's market dominance, robust dividend yield, new contracts, and current valuation, we recommend a "Buy" rating on the stock at the closing price of USD 23.08, down 0.86% as of December 07, 2021.

*All forecasted figures and Industry Information have been taken from REFINITIV.

*The report has been partly sourced from REFINITIV.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

 

NETGEAR, Inc.

NTGR Details

NETGEAR, Inc. (NASDAQ: NTGR) is a global corporation that provides consumers, organizations, and service providers with high-performance premium networking technology and internet-connected products. With a focus on reliability and ease of use, its solutions and services are built on several technologies, including wireless (WiFi and 4G/5G mobile), ethernet, and powerline. NTGR operates in two segments, 1) Small and Medium Business (SMB), and 2) Connected Home. As of December 07, 2021, the company’s market capitalization stood at USD 844.30 million.

Latest News:

• Launch of New Product: NTGR introduced the first 5G tri-band WiFi 6 mesh system for homes and businesses on November 02, 2021. It's the newest addition to the company's high-performance Orbi product line, which offers high-speed 5G internet to people who have limited or unreliable access to wired broadband.

Q3FY21 Results:

• Fall in Topline: The company's net revenue fell 23.36% to USD 290.15 million in Q3FY21 (ended October 03, 2021) from USD 378.11 million in Q3FY20 (ended September 27, 2020), owing to a 34.16% decline in sales from the Connected Home business.
• Reduction in Bottomline: Net income for Q3FY21 was USD 9.58 million, down 62.47% from USD 25.54 million in Q3FY20.
• Healthy Balance Sheet: The company had USD 292.20 million in cash and cash equivalents (including short-term investments) as of October 03, 2021, and no outstanding debt.

Key Risks:

• Supplier Concentration Risk: NTGR relies on a small number of vendors for its critical manufacturing component. In addition, the majority of the semiconductors utilized in its products come from a single supplier. As a result, any delay in obtaining the appropriate amount or unfavorable pricing could jeopardize its output and finances.
• Customer Concentration Risk: Most of NTGR's revenue comes from traditional and online stores (Best Buy Co., Inc., Amazon.com, Inc., Ingram Micro, Inc., Tech Data Corporation) and service providers (AT&T). As a result, losing any of its significant customers could harm its bottom line.

Outlook:

• Q4FY21 Outlook: As of October 27, 2021, NTGR estimates its Q4FY21 total sales will range between USD 250 – 265 million, with an operating margin of -0.5% to 0.5% and 2.0% to 3.0% on GAAP and non-GAAP basis, respectively. It also expects an 80.0% GAAP tax rate in Q4FY21.

Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation

(Analysis by Kalkine Group)

• % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

NTGR Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

NTGR's stock price has fallen 29.77% in the past nine months and is currently leaning towards the lower band of its 52-week range of USD 26.07 to USD 46.38. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 53.29. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 35.46.

Considering the significant correction in the stock price in the past nine months, new product launches, strong balance sheet, current valuation, and associated risks, we recommend a "Speculative Buy" rating on the stock at the closing price of USD 28.88, up 0.10% as of December 07, 2021.

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

* All forecasted figures and industry information have been taken from REFINITIV.

* Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

 

Viant Technology Inc.

DSP Details

Viant Technology Inc. (NASDAQ: DSP) is a people-based advertising software company that allows marketers and agencies to plan, acquire, and measure their advertising efforts across most channels. The company's self-service demand-side platform, Adelphic, enables marketers and ad agencies to plan, buy, and measure advertising across several channels. DSP charges platform fees to its customers, which is either a percentage of spend or a set monthly subscription fee and payments for extra features like data and advanced reporting. The company was listed on NASDAQ on February 10, 2021, at an issue price of USD 25.00 per share.

Latest News:

• Key Collaborations: On November 03, 2021, DSP announced the integration of Beachfront's premium linear and connected TV (CTV) inventory into Adelphic advertising software. This partnership enables Adelphic to become the first demand-side platform to handle Beachfront's unique linear TV inventory, which is available for real-time bidding.

Previously, on October 27, 2021, DSP collaborated with iSpot.tv, the leader in real-time TV ad measurement and attribution, to expand the former's TV advertising services by integrating iSpot's Unified Measurement solution into the Adelphic advertising software. This collaboration will enable DSP's advertisers to run over-the-top (OTT) and linear TV ads, thus improving their reach, frequency, and business outcome analytics.

Q3FY21 Results:

• Growth in Topline: The company reported YoY growth of 26.49% in total revenue to USD 50.86 million in Q3FY21 (ended September 30, 2021) compared to USD 40.21 million in Q3FY20, attributable to growth in the number of active customers and average contribution.
• Decline in Profitability: DSP reported a net loss of USD 2.54 million in Q3FY21 vs. a net income of USD 7.48 million in Q3FY20.
• Cash and Debt Position: As of September 30, 2021, the company had cash & cash equivalents of USD 242.61 million and total debt of USD 17.50 million.

Key Risks:

• Customer Concentration Risk: In FY20, DSP's top two customers represented 13.3% and 13.2% of its total revenue. As a result, the loss of any of these key customers could negatively impact its financial performance.
• Dependence on Third Parties: DSP is dependent on third-party data center hosting providers (including Google Cloud Platform and Amazon Web Services) for servers' power, internet access, and technological security. Hence, any service disruption or facility damage could harm the company's operations.

Outlook:

Q4 and FY21 Guidance Range (Source: Q3FY21 Earnings Presentation, August 12, 2021)

Valuation Methodology: Price/Sales Per Share Multiple Based Relative Valuation

(Analysis by Kalkine Group)

• % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

DSP Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

DSP's share price has declined 70.88% in the past six months and is currently leaning towards the lower-band of the 52-week range of USD 8.56 to USD 69.16. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 39.52. We have valued the stock using the Price/Sales-based relative valuation methodology and arrived at a target price of USD 12.82.

Considering the correction in the stock price in the past six months, strong topline performance, key collaborations, current valuation, and associated risks, we recommend a "Speculative Buy" rating on the stock at the current price of USD 9.90, up 4.65% as of December 07, 2021, 02:59 PM ET.

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

* All forecasted figures and industry information have been taken from REFINITIV.

* Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.