Amkor Technology, Inc.

AMKR Details

Amkor Technologies, Inc. (NASDAQ: AMKR) provides outsourced semiconductor packaging and test services to Integrated Device Manufacturers (IDMs), fabless semiconductor companies, and contract foundries. It offers turnkey packaging and test services, including semiconductor wafer bump, wafer probe, wafer back-grind, package design, packaging, and test and drop shipment services. Its revenues are categorized into 1) Mainstream Products, which include leadframe packages, substrate-based wirebond packages, and micro-electromechanical system packages and, 2) Advanced Products, which consist of flip chip-scale wafer-level, and flip-chip ball grid array packages.

Q2FY21 Results: The company reported an uptick of 19.92% in total revenue to USD 1.41 billion in Q2FY21 (ended June 30, 2021) compared to USD 1.17 billion in Q2FY20, primarily due to an increase in demand in communication and consumer end markets. Net income for Q2FY21 grew 126.99% YoY and stood at USD 125.81 million compared to USD 55.42 million in Q2FY20. As of June 30, 2021, AMKR had cash & cash equivalents (including short-term investments) of USD 885.73 million with a total debt of 1.07 billion (including short-term finance lease liabilities).

Key Risks: AMKR's top 10 customers accounted for 65% of its net sales in FY20. As a result, the loss of any of these key customers could hurt the company's financials. In addition, most of AMKR's manufacturing facilities and operations are outside of the US, and so are its customer and vendor operations. Hence, any restrictive trade barriers adopted by the US or foreign governments could adversely affect the operations and profitability of the company.

Outlook: As of Q2FY21, AMKR expects its Q3FY21 revenue to range between USD 1.65 – 1.75 billion, thus realizing YoY growth of 26% at the mid-point of the range. It expects to keep its gross margin to the tune of 18.5% – 20.5% in Q3FY21. The company expects to earn USD 150 – 200 million as net income and USD 0.60 – 0.80 earning per diluted share in the coming quarter. In FY21, it forecasts to incur capital expenditures of ~USD 775 million.

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.

AMKR Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: AMKR's stock price has increased by 36.23% and 54.40% in the past three and six months, respectively, and is currently trading ahead of its 52-week range of USD 10.71 to USD 27.50. The stock is currently trading above its 50 and 200 DMA levels, and its RSI Index is at 80.10. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 24.34. Considering the significant increase in the stock price, we believe the current price adequately reflects the robust fundamentals and recommend a "Sell" rating on the stock at the current price of USD 27.56, up 1.55% as of August 06, 2021, 11:38 AM ET.

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

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

Atea Pharmaceuticals, Inc.

AVIR Details

Atea Pharmaceuticals, Inc. (NASDAQ: AVIR) is a clinical-stage biopharmaceutical business that develops and commercializes medicines for life-threatening viral disorders. The company has established a proprietary nucleotide prodrug platform to develop novel product candidates to treat single-stranded ribonucleic acid (ssRNA) viruses. In addition, AVIR is actively working on orally available, potent, and selective nucleotide prodrugs for difficult-to-treat, life-threatening viral infections, such as coronavirus 2 (severe acute respiratory syndrome) (SARS-CoV-2).

Positive Interim Results & Reaching Milestones with AT-527 Phase 2 Trial: On June 30, 2021, AVIR announced that its global Phase 2 study for AT-527 in mild or moderate COVID-19 patients yielded positive interim results. The study included data from 70 hospitalized, high-risk COVID-19 patients, and the interim results showed that AT-527 rapidly reduced viral load levels. Under a strategic collaboration, F. Hoffmann-LaRoche Ltd. and Genentech, Inc. (collectively, Roche) and AVIR are jointly developing AT-527 to treat COVID-19. In addition, on June 16, 2021, the company announced that it expects to receive a USD 50 million payment from Roche in connection with reaching a milestone in the development of AT-527.

Q1FY21 Results: The company reported total revenue of USD 65.98 million in Q1FY21 (ended March 31, 2021), compared to nil in Q1FY20, which was entirely derived from the license agreement signed with Roche in October 2020. R&D expenses for Q1FY21 were USD 26.57 million, 9.42x of USD 2.82 million in Q1FY20, owing to the increased external expenses relating to the advancement of product candidates for the treatment of COVID-19 and dengue fever. Net income in Q1FY21 was USD 30.71 million in Q1FY21 vs. a net loss of USD 3.99 million reported in Q1FY20. AVIR exited the quarter with USD 833.75 million and no outstanding debt.

Key Risks: AVIR's business is highly dependent on the success of its most advanced product candidates, particularly AT-527, which still requires significant clinical testing before seeking regulatory approval and launching commercial sales. If these products fail in clinical development, do not receive regulatory approval, or are not successfully commercialized, the company's business will be adversely affected.

In addition, the process of seeking regulatory approval is lengthy, expensive, and unpredictable. The approval policies, regulations, or the amount/type of clinical data necessary to receive approval may change during this process and vary across jurisdictions. Hence, failure to obtain regulatory approval for its products could seriously harm AVIR's business.

Valuation Methodology: Price/Sales Per Share Value 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.

AVIR Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: AVIR stock increased 46.29% in the past three months and is currently trading in the lower-band of the 52-week range of USD 18.72 to USD 94.17. The stock is currently trading above its 50 DMA level, and its RSI Index is 69.62. We have valued the stock using the Price/Sales Per Share-based relative valuation methodology and arrived at a target price of USD 25.97. Considering the significant uptick in the stock price, we believe the stock price sufficiently reflects the decent business fundamentals and recommend a "Sell" rating on the stock at the current price of USD 31.19, up 11.79% as of August 06, 2021, 3:22 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.