Broadmark Realty Capital Inc.

BRMK Details

Broadmark Realty Capital Inc. (NYSE: BRMK) is a commercial real estate finance company based in the United States specializing in underwriting and servicing short-term first deed of trust loans for real estate investors and developers. The company has 200 active loans as of March 31, 2021, with roughly USD 1.3 billion in total commitments and USD 871.50 million in principle outstanding across 137 borrowers in 14 states (excluding the District of Columbia). The loan offered by BRMK typically ranges from USD 0.10 million to USD 40 million in total commitments at origination, carries interest at a fixed annual rate of 10% to 13%, with the initial duration of 5 to 18 months depending on the size of the real estate project and the completion horizon. As of July 06, 2021, the company’s market capitalization stood at USD 1.40 billion.

Loan Portfolio by Property Type & Loan Purpose (Source: Supplemental Earnings Presentation, Q1FY21)

Equity Offering Program: BRMK announced on March 3, 2021, that it might sell its common stock with an aggregate gross sales price of up to USD 200 million through an at-the-market (ATM) equity offering program from time to time. During Q1FY21, however, the corporation did not sell any common shares. The net proceeds from this program will be used to fund the company's lending operations.

Q1FY21 Results: The company reported a slight decrease of 7.23% in total revenue to USD 29.46 million in Q1FY21 (ending March 31, 2021) compared to USD 31.76 million in Q1FY20, owing to a decline in interest income due to lower effective interest-bearing principal during Q1FY21. BRMK recorded a significant decline in net provision for credit losses to USD 2.70 million in Q1FY21 compared to USD 4.43 million in Q1FY20. Net income declined by 23.00% to USD 20.38 million in Q1FY21 compared to USD 26.47 million in Q1FY20. In June 2021, BRMK announced a cash dividend of USD 0.07 per share of common stock. The dividend is payable on July 15, 2021, to stockholders of record as of June 30, 2021.

Key Risks: The credit portfolio of the organization is centered in 12 US states. Washington and Colorado account for 46.70% of the overall loan portfolio of the BRMK. Any decrease in the value of properties securing the company's loan due to changes in zoning rules, increase in unemployment rates, or any environmental events in these states could lower the value of the collateral and the possible proceeds available to borrowers to repay their loans.

Valuation Methodology: Price/Earnings Multiple Based Relative Valuation

(Data Source: 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.

BRMK Daily Technical Chart (Source: Refinitiv)

Stock Recommendation: BRMK's share price has increased by only 0.67% in the past 3 months and is currently leaning towards the higher band of the 52-week range of USD 8.72 to USD 11.10. The stock is currently trading between its 50 and 200 DMA levels, and its RSI Index is 42.24. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 12.10. On the technical chart, the next support level is USD 9.10. Considering the slight adjustment in the stock price in the past 3 months, strong balance sheet, solid dividend yield, current valuations, and associated risks, we recommend a “Speculative Buy” rating on the stock at the closing price of USD 10.52, down by 0.75% as of July 06, 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 or if the price closes below the support level. 

Coherus BioSciences Inc.

CHRS Details

Coherus BioSciences Inc. (NASDAQ: CHRS) is a biopharmaceutical company that focuses on the biosimilar and immuno-oncology markets. The company is currently involved in commercializing UDENYCA, a long-acting granulocyte colony-stimulating factor, in the United States. CHS-1420 (an adalimumab (Humira) biosimilar), ranibizumab (Lucentis) biosimilar, bevacizumab (Avastin) biosimilar, and toripalimab, an anti-PD-1 antibody, are four other medications in the company's pipeline. As of July 06, 2021, the company's market capitalization stood at USD 1.04 billion.

Phase-3 toripalimab plus Chemotherapy Trial Results: On June 04, 2021, the company and Shanghai Junshi Biosciences Co., Ltd., a leading provider of innovation-driven biopharmaceutical products, jointly announced the optimistic results from the pivotal study “JUPITER-02”, a randomized, placebo-controlled Phase 3 clinical trial assessing toripalimab plus chemotherapy for the first-line treatment of recurrent or metastatic nasopharyngeal carcinoma (NPC).

CHRS Biosimilars Product Pipeline (Source: Company Website)

Q1FY21 Results: The company reported a 28.53% decline in net product revenue to USD 83.03 million in Q1FY21 as compared to USD 116.18 million in Q1FY20. Net loss during Q1FY21 was USD 172.95 million, compared to the net income earned of USD 35.57 million in Q1FY20, due to an increase in research and development expenditure during Q1FY21. As of March 31, 2021, the company’s cash and cash equivalents balance stood at USD 259.48 million, with total debt of USD 406.53 million.

Key Risks: CHRS currently deals in a single product (UDENYCA) with minimal commercialization. Dependence on one product could have a long-term impact on the company's revenue if new goods do not make it to the commercialization stage, which usually takes a long time. In addition, the company's top two customers i.e., McKesson and AmeriSource-Bergen Corp., accounted for a total of 75% of the revenue in both FY20 and FY19. Undue reliance on certain customers for business could hurt the company’s financial health.

Outlook: In its Q1FY21 Report, the company stated that it expects the revenue from UDENYCA and market penetration to rise in H2FY21, assuming the COVID-19 pandemic recedes, and treatment patterns normalize. CHRS expects full-year FY21 R&D and SG&A expenditures of USD 370 million to USD 400 million, except the USD 145 million upfront payment provided to Junshi Biosciences in the first quarter.

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.

CHRS Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: CHRS’ share price has declined by 24.24% in the past 12 months and is currently leaning towards the lower band of the 52-week range of USD 12.90 to USD 22.22. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is 43.89. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 16.18. On the technical chart, the next support level is USD 11.50. Considering the company’s growth prospects, strong product pipeline, increase in research activity, and associated risks, we recommend a “Speculative Buy” rating on the stock at the closing price of USD 13.63, down by 0.73% as of July 06, 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 or if the price closes below the support level.

Waitr Holdings Inc.

WTRH Details

Waitr Holdings Inc. (NASDAQ: WTRH) is an online ordering technology company that offers delivery, carryout, and dine-in services across the United States. In the small and mid-size sectors, WTRH also partners with independent local eateries and national chains. The Waitr and Bite Squad smartphone applications, as well as the Delivery Dudes mobile application, are the company's technology platforms. As of March 31, 2021, the company had over 23,000 restaurants in over 800 cities, with average delivery orders of approximately 37,627 during the quarter. As of July 06, 2021, the company’s market capitalization stood at USD 208.86 million.

Q1FY21 Results: The company reported a 15.11% YoY growth in total revenues to USD 50.93 million in Q1FY21 (ending March 31, 2021) as compared to USD 44.24 million in Q1FY20. The increase in the top line was a consequence of the acquisition of Delivery Dudes and organic expansion, which strengthened the market presence in both new and existing markets. However, the company reported a net loss of USD 3.71 million in Q1FY21 compared to USD 2.10 million in Q1FY20. As of March 31, 2021, the company’s cash and cash equivalents stood at USD 67.86 million, with the total debt amounting to USD 81.65 million.

Key Risks: The implementation of a favorable, business-friendly labor regulation by the Department of Labor (DOL) during the Trump administration has been canceled by the Biden administration. Furthermore, the DOL might impose a more worker-friendly law, as well as tighter enforcement against the misclassification claims by the companies. The issuance of such tighter laws, or an increase in DOL enforcement activities, could hurt WTRH's operations and profits.

Outlook: WTRH’s announced a strategic rebranding plan on June 3, 2021, to modify its name and visual identity, with results expected in the next 12–18 months. WTRH's long-term vision of innovation, expansion into new sectors, and developing a technology-forward platform is reflected in this endeavor.

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’s share price has declined by 51.90% in the past twelve months and is currently inclined towards the lower end of the 52-week range of USD 1.76 to USD 5.85. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is 38.44. On the technical chart, the next support level is USD 1.35. We have valued the stock using the Price/Sales-based relative valuation methodology and arrived at a target price of USD 2.21. Considering the significant correction in the stock price, strategic growth endeavors, current valuation, and associated risks, we recommend a “Speculative Buy” rating on the stock at the closing price of USD 1.77, down by 2.21% as of July 06, 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 or if the price closes below the support level.