Viant Technology Inc.

DSP Details

Viant Technology Inc. (NASDAQ: DSP) is a people-based advertising software company that enables marketers and agencies to plan, acquire, and measure their advertising efforts across most channels. It provides, Adelphic, a self-service demand-side platform (DSP) that allows marketers and their 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, with an issue price of USD 25.00. As of July 23, 2021, DSP’s market capitalization stood at USD 1.08 billion.

Expanding Its Advertisers Reach: On June 16, 2021, Comscore (NASDAQ: SCOR), a media measurement and analytics company, announced the successful integration of its contextual Activation suite with DSP's digital platform Adelphic. As a result, DSP advertisers can now use Comscore's cookie-free targeting solutions, such as brand protection, contextual relevance, keyword targeting, along with Predictive Audiences, Comscore's recent invention, which turns audience targets into privacy-friendly contextual signals.

Q1FY21 Results: DSP reported a slight increase of 5.20% in net revenue to USD 40.14 million in Q1FY21 (ended March 31, 2021) compared to USD 38.16 million in Q1FY20, attributable to higher demand. The company reported YoY growth of 51.43% in adjusted EBITDA of USD 4.88 million in Q1FY21 vs. USD 3.22 million in Q1FY20. Net loss attributable to shareholders was USD 14.87 million in Q1FY21, compared to a net income of USD 0.33 million in Q1FY20. As of March 31, 2021, DSP’s cash balance was USD 246.59 million, with total debt amounting to USD 23.53 million.

Key Risks: In FY20, two advertising agency holding firms accounted for 13.3% and 13.2% of DSP’s total revenue, respectively. Hence, the loss of any of these key customers could hurt its financials. Furthermore, DSP relies on data center hosting services provided by third parties (such as Google Cloud Platform and Amazon Web Services) to ensure that its servers have continuous power, internet access, and technological security. Therefore, any termination/lapse of service or damage to a facility could affect DSP’s operations.

Outlook: As of Q1FY21, DSP anticipates generating revenue of USD 45 - 47 million along with an adjusted EBITDA ranging between USD 3.5 - USD 4.5 million during Q2FY21. For FY21, DSP expects clocking revenue in the range of USD 200 - 205 million, with adjusted EBITDA to the tune of USD 24 -27 million.

Valuation Methodology: Price/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.

DSP Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: DSP share price has decreased 47.71% in the past three months and is currently leaning towards the lower band of the 52-week range of USD 16.11 to USD 69.16. The stock is currently trading below its 50 DMA level, and its RSI Index is 26.93. We have valued the stock using the Price/Sales-based relative valuation methodology and arrived at a target price of USD 25.21. Considering the attractive valuation of the newly listed company, product enhancements, positive outlook, and associated risks, we recommend a “Speculative Buy” rating on the stock at the closing price of USD 17.47, down 5.05% as of July 23, 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. 

Waitr Holdings Inc.

WTRH Details

Waitr Holdings Inc. (NASDAQ: WTRH) is an online food ordering technology platform that offers delivery, carryout, and dine-in options. Along with its subsidiaries Bite Squad and Delivery Dudes, the company connects local restaurants and grocery stores to diners in underserved U.S. markets. On March 31, 2021, WTRH had over 23,000 restaurants from 800 cities listed on its platforms. As of July 24, 2021, the company’s market capitalization stood at USD 190.39 million.

Adding Options in the Customer’s Menu: On July 22, 2021, WTRH announced a partnership with Boston Market Corporation, an expert in rotisserie cooking, operating in over 330 locations across the U.S., as the latter’s delivery partner. Similarly, in June 2021, WTRH stated that it had added Long John Silver’s, the largest U.S. quick-service seafood chain with 700 restaurants, to its platform. These collaborations have enhanced WTRH’s market presence in the on-demand delivery sector.

1QFY21 Results: The company reported a 15.11% growth in net revenue to USD 50.93 million in Q1FY21 (ended March 31, 2021) compared to USD 44.24 million in Q1FY20, attributable to the acquisition of Delivery Dudes and organic expansion into new markets, which strengthened the market presence in both new and existing markets. WTRH reported a more than two-fold increase in its operating income, which stood at USD 2.48 million in Q1FY21 vs. USD 0.73 million in Q1FY20. The net loss for Q1FY21 was USD 3.71 million in contrast to USD 2.10 million in Q1FY20. As of March 31, 2021, the company had a cash balance of USD 67.86 million and total debt of USD 81.65 million. 

Key Risks:  Implementation of a favorable, business-friendly labor regulation by the Department of Labor (DOL) during the Trump administration has been withdrawn by the Biden administration. Furthermore, the DOL might enforce a more worker-friendly regulation and stricter enforcement of misclassification claims against companies operating, especially in the gig economy. The issue of such stricter laws, or an increase in DOL enforcement activities, could harm the company's operations and profits.

Outlook: On June 3, 2021, WTRH announced a strategic rebranding initiative to revamp its name and visual identity, the effect of which could be seen in the next 12 – 18 months. This initiative is expected to further WTRH's long-term vision of innovation, expansion into new verticals, and developing a technology-forward platform.

Valuation Methodology: Price/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.

WTRH Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: WTRH has decreased by 35.55% and 51.18% in the past 3 and 6 months, respectively, and is currently leaning towards the lower end of the 52-week range of USD 1.41 to USD 5.85. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is 43.56. We have valued the stock using the Price/Sales-based relative valuation methodology and arrived at a target price of USD 2.16. Considering the correction in the stock price, strategic growth endeavors, significant leverage, and other associated risks, we recommend a “Speculative Buy” rating on the stock at the closing price of USD 1.65 as of July 23, 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.

Natural Gas Services Group, Inc.

NGS Details

Natural Gas Services Group, Inc. (NYSE: NGS) is an oil and gas equipment and services company. It manufactures, rents, and markets natural gas compressors, flare systems, and other allied equipment of compression units that are used in small, medium, and large horsepower applications for oil and natural gas production. It also sells custom-fabricated natural gas compressors tailored to customers' specifications, such as well pressures, production characteristics, and specific uses. As of March 31, 2021, NGS had rented 1,265 natural gas compressors with a total capacity of 287,914 HP to 80 customers. In Q1FY21, the Rental Income segment accounted for 83.39% of NGS’ total revenue.

New Credit Facility: On May 12, 2021, the company announced the closure of a USD 20 million revolving credit facility with Texas Capital Bank, which can be increased by a maximum amount of USD 30 million (subject to certain preconditions). The facility will mature in May 2026 and is secured by a first lien on substantially all of NGS’ assets, with subsidiary guarantees. This credit facility is intended to provide a strong liquidity position for NGS to fulfill its working capital and strategic investment requirements.

Appointment of CFO: On May 11, 2021, NGS announced the appointment of Micah C. Foster as its Vice President, Chief Financial Officer (CFO), and Corporate Secretary. Mr. Foster carries an experience of more than 17 years in the energy industry and public accounting. Prior to his appointment as CFO, he served as the interim Controller with the company since January 2021. This news followed the earlier appointment of leading environmental specialist Nigel Jenvey to its Board of Directors on April 05, 2021. Mr. Jenvey is the Global Head of Carbon Management at Gaffney, Cline & Associates.

Q1FY21 Results: NGS reported a slight increase of 2.83% in total revenues to USD 18.40 million in Q1FY21 (ended March 31, 2021) compared to USD 17.89 million in Q1FY20, attributable to higher compressor sales (up 86.97% YoY) offset by lower rental revenues (down 4.71% YoY). Aided by improved sales margins, NGS reported 3.49% YoY growth in adjusted EBITDA, to USD 6.50 million in Q1FY21 compared to USD 6.28 million in Q1FY20. The company reported a net loss of USD 394 thousand for Q1FY21 vs. a net income of USD 4.08 million in Q1FY20. As of March 31, 2021, NGS’ cash and cash equivalents were USD 30.68 million with no outstanding debt.

Key Risks: NGS generates most of its revenue from a limited number of customers, with Occidental Permian, Ltd. alone accounting for ~30% of net sales and 35% of account receivables in FY20. The loss of any of its key customers could hurt its financials. In addition, NSG operates in the oil & gas industry and faces direct competition from larger players with higher financial and operational resources at their disposal. Any advanced innovation or superior product development by its competitors could impact its operations.

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.

NGS Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: NGS’ stock price has decreased 13.72% in the past one month and is currently at the mid-point of its 52-week range of USD 6.20 to USD 12.23. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is 35.42. We have valued the stock using the EV/EBITDA-based relative valuation methodology and arrived at a target price of USD 10.92. Considering the correction in the stock price, strong balance sheet, current valuation, and associated risks, we recommend a “Speculative Buy” rating on the stock at the current price of USD 9.28, down 0.70% as of July 23, 2021, 10:46 AM 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.