First Solar, Inc.

 FSLR Details

First Solar, Inc. (NASDAQ: FSLR) manufactures advanced thin-film technology-based photovoltaic (PV) panels and modules. The company’s operating segments are 1) Modules, which manufactures cadmium telluride solar modules that convert sunlight into electricity, and 2) Systems, which offers power plant construction, operation, and maintenance services to utilities, independent power producers, and commercial companies. As of June 29, 2021, the company’s market capitalization stood at USD 9.86 billion.

Accelerating Capacity Expansion: On June 09, 2021, the company announced that it will invest USD 680 million in the construction of a new manufacturing facility in Ohio. This will amplify FSLR’s domestic PV solar production capacity by 3.3 gigawatts (GW) DC annually, which can go up to 6 GW in the coming years. Capital expenditure for the new facility will be borne out of FSLR’s cash balance, and the facility is expected to be operational by H1FY23.

Q1FY21 Results: FSLR reported total revenue of USD 803.37 million for Q1FY21 (ending March 31, 2021), compared to USD 532.12 million in Q1FY20, realizing high double-digit growth of 50.97% YoY due primarily to an increase in systems revenue piloted by US project sales. The impact of the strong performance of the topline percolated down to the company's operating performance, wherein it reported an increment of USD 250.69 million (including a one-time gain of USD 150.90 million) in its operating income to USD 252.35 million in Q1FY21 vs USD 1.66 million in Q1FY20. FSLR reported a net income of USD 209.67 million with a net margin of 26.10% in Q1FY21 vs USD 90.70 million in Q1FY20.    

Key Risks: Expansion in the global supply of PV modules continues to pose challenges for the company. Imbalances in the demand and supply and aggressive price competition within the industry could impact the company's financial performance. In addition, FSLR is dependent on a limited number of suppliers for its raw material needs. Also, some of its manufacturing equipments are sourced from a single vendor. Any failure on the contractual obligation by vendors could harm its operations.    

Outlook: For FY21, FSLR forecasts revenue to be in the range of USD 2.85 - 3.03 billion with a gross profit to the tune of USD 695 - 775 million. The revenue guidance rides on its FY21 shipment estimates of 7.8 GW - 8.0 GW. In FY21, EPS is estimated to be in the range of USD 4.05 - 4.75.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company’s FY21E trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

FSLR Daily Technical Chart

Stock Recommendation: FSLR share price has increased 21.76% and 7.10% in the past 1 and 3 months, respectively, and is currently inching towards the higher band of the 52-week range of USD 48.30 to USD 112.50. The stock is currently trading above its 50 and 200 DMA levels, and its RSI Index is 76.37. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 97.79. Considering the significant uptick in the stock price in the past one month, decent fundamentals, positive outlook, and associated risks, we recommend a “Hold” rating on the stock at the closing price of USD 92.67, down 0.04% as of June 29, 2021.

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

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

Perion Network Ltd.

 PERI Details

Perion Network Ltd. (NASDAQ: PERI) is a global technology company that provides advertising and searching solutions to agencies, brands, and publishers. PERI is active in all three pillars of digital advertising: ad search, social media, and display/video/Connected TV (CTV). Its diversified solutions portfolio enables it to position itself to respond to any changes in which the direction branded and e-commerce spending is headed. PERI uses Artificial Intelligence (AI) and Machine Learning (ML), which enable brands and advertisers to “Capture and Convince” users across multiple platforms and channels.  As of June 29, 2021, the company’s market capitalization stood at USD 722.35 million.

Introduction of New Division Catering to Retail: On June 17, 2021, PERI announced that it has earmarked a new division catering primarily to retail marketing, which will enable retailers to deliver customized advertisements through its high-impact display units. The idea has been beta tested and has proved to generate a Return On Ad Spend (ROAS) of up to 9x together with increased brand awareness of 83%.

Q1FY21 Results: PERI reported total revenue of USD 89.82 million for Q1FY21 (ending March 31, 2021) compared to USD 66.05 million in Q1FY20, registering a growth of 35.98% YoY. The improvement in topline is attributable to a 60.69% YoY increase in Display and Social Advertising revenue driven by growth in CTV and Content Monetization solutions. The impact of the strong performance of the topline percolated down to the company's operating performance, wherein it reported a threefold increment in its operating income to USD 3.86 million in Q1FY21 as compared to USD 1.00 million in Q1FY20. The operating margin improved by 279 bps to 4.3% in Q1FY21 as compared to Q1FY20. Net income soared by 147.83% YoY in Q1FY21 to USD 3.31 million vs USD 1.33 million in Q1FY20.

Key Risks: PERI operates in the digital advertising industry and faces direct competition from established players like Google, Facebook, and Amazon, which could undermine the company's business interests. Further, a significant chunk of PERI's Search Advertising and other segment revenue comes from an agreement with Microsoft. Any unfavorable change in this agreement could impair its results of operations.

Outlook: In FY21, PERI expects to generate revenues in the range of USD 410-430 million, with adjusted EBITDA ranging between USD 49 million and USD 51 million. 

 Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company’s FY21E trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

PERI Daily Technical Chart

Stock Recommendation: PERI stock price has increased 28.27% and 77.40% in the past 3 and 6 months, respectively, and is currently leaning towards the higher band of the 52-week range of USD 5.02 to USD 28.32. The stock is currently trading above its 50 and 200 DMA levels, and its RSI Index is 76.38. We have valued the stock using the EV/EBITDA-based relative valuation methodology and arrived at a target price of USD 24.00. Considering the significant uptick in the stock price in the past 6 months, decent fundamentals, positive outlook, and associated risks, we recommend a “Hold” rating on the stock at the closing price of USD 22.14, up 2.03% as of June 29, 2021.

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

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