PagerDuty, Inc.

PD Details

PagerDuty, Inc. (NYSE: PD) is an on-call management software company. Its platform collects digital signals from almost any software-enabled system or device, integrates them with human response data, and orchestrates teams to execute the appropriate actions in real-time. The primary source of revenue is cloud-hosted subscription fees, which account for the majority of its revenue.

Latest News:

• Agreement with AWS: On November 29, 2021, PD announced a multi-year go-to-market deal with Amazon Web Services, Inc. (AWS) to ensure that customers' cloud migration and digital operational maturity journeys are as smooth as possible. PD also revealed that a fully managed Rundeck Cloud automation option will be available on AWS in early 2022 and an enterprise offering on AWS Marketplace to show its commitment to the partnership.
• New Capabilities to Enhance Value: On November 16, 2021, PD announced additional capabilities to support businesses' digital-first approach as they strive to satisfy heightened customer demands. The new event management system's unique integration with operations automation eliminates manual processes and toil, automates labour, and promotes best practises across distant teams
  

9MFY22 Results:

• Growth in Topline: The company's revenue increased by 31.51% to USD 202.89 million during 9MFY22 (ended October 31, 2021) from USD 154.27 million during 9MFY21.
• Increase in Net Losses: PD witnessed an increase in net losses to USD 78.56 million during 9MFY22 vs. USD 46.76 million during 9MFY21.
• Healthy Balance Sheet: The company had USD 545.29 million in cash and cash equivalents (including short-term investments) as of October 31, 2021, with outstanding debt of USD 280.62 million.

Key Risks:

• Product Concentration Risk: Subscription sales for the company's On-Call Management solution account for nearly all of the company's revenue. The company expects subscriptions to account for a significant amount of its revenue for the foreseeable future. The company's operating situation could be harmed due to a drop in demand for its product, technical advancements, and a stagnant market for real-time operations platforms.
• Seasonal Business Risk: Each year's first quarter is often the lowest in billings and bookings. The company's first-quarter billings and bookings are often lower than the previous fourth quarter. As it continues to target larger enterprise customers, the firm expects this seasonality to affect billings, bookings, and other operating outcomes in the future.

Outlook:

• Q4FY22 Estimates: PD forecasts total revenue of USD 75.5–76.5 million for Q4FY22 in its Q3FY22 earnings report, showing a growth rate of 27 to 29% YoY. It also anticipates a Non-GAAP net loss per share of USD 0.06-0.05, based on 86 million shares.
• FY22 Estimates: PD anticipates overall revenues of USD 278.5-279.5 million in FY22, reflecting a 30 to 31% YoY increase. It also predicts a Non-GAAP net loss per share of USD 0.34-0.33 based on 84 million shares.

Valuation Methodology: EV/Sales 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.

PD Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

PD's stock price has fallen 28.80% in the past three months and is currently leaning towards the lower band of its 52-week range of USD 29.15 to USD 58.36. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 35.07. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 41.33.

Considering the correction in the stock price in the past three months, new contracts, and current valuation, we recommend a "Buy" rating on the stock at the current price of USD 33.48, up 5.95% as of December 07, 2021, 3:30 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.

OptimizeRx Corporation

OPRX Details

OptimizeRx Corporation (NASDAQ: OPRX) operates as a digital health company that offers communications solutions for life science companies, physicians, and patients. OPRX delivers electronic clinical information to the medical profession via electronic health records (EHRs), enabling pharmaceutical companies to engage directly with healthcare professionals. The company's digital and mobile software as a service (SaaS)-based solution facilitates patient adherence, care management, and affordability. As of December 07, 2021, the company’s market capitalization stood at USD 1.04 billion.

Latest News:

• Overcoming Hurdles in Multiple Sclerosis Treatment: On November 05, 2021, OPRX released a study of Multiple Sclerosis (MS) addressing the problems and common causes of treatment delays and cessation in MS patients. The study highlighted the benefits of early MS treatment beginning in slowing disease progression and minimizing new damage areas in the brain and spinal cord. The review of existing research reveals opportunities for life sciences companies to meet the needs of both patients and healthcare professionals (HCPs), such as harnessing real-world data to inform HCP interaction - facilitating timely MS patient identification and diagnosis.
• Key Recruitment: On September 30, 2021, OTRX announced the appointment of Edward Stelmakh as its Chief Financial Officer (CFO) and Chief Operating Officer (COO), effective October 11, 2021. Mr. Edward carries over 30 years of experience in various geographies and sectors within the Pharmaceutical industry. Before joining OPRX, he held the position of CFO/COO at Otsuka America Pharmaceuticals Inc, the US division of the Japanese global healthcare enterprise, since 2015.

Q3FY21 Results:

• Growth in Topline: The company reported YoY growth of 53.29% in total revenue to USD 16.12 million in Q3FY21 (ended September 30, 2021) compared to USD 10.52 billion in Q3FY20,
• Surge in Profitability: OPRX reported a net income of USD 39.89 thousand in Q3FY21 vs. a net loss of USD 0.28 million in Q3FY20.
• Cash and Debt Position: As of September 30, 2021, the company had cash & cash equivalents of USD 85.06 million and no outstanding debt.

Key Risks:

• Customer Concentration Risk: OPRX derives its revenue from less than 50 customers, majorly large pharmaceutical companies. The loss of any of its key customers could hurt its financials.
• Regulatory Risk: OPRX is subject to complex state and federal laws in the healthcare arena and the political sensitivity of healthcare delivery. As a result, stricter regulatory oversight could impair its profitability.

Valuation Methodology: EV/Sales 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.

OPRX Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

OPRX's share price has declined 36.95% in the past month and is currently trading close to mid-band of its 52-week range of USD 27.71 to USD 99.18. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 26.28. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 72.06.

Considering the correction in the stock price in the past month, strong top-line performance, current valuation, and associated risks, we recommend a "Speculative Buy" rating on the stock at the closing price of USD 60.19, up 3.01% 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.