Neurocrine Biosciences, Inc.

NBIX Details

Neurocrine Biosciences, Inc. (NASDAQ: NBIX) is a neuroscience-focused biopharmaceutical company focusing on identifying and developing novel therapies for patients with severe neurological, endocrine, and mental disorders. The company's commercial product portfolio includes INGREZZA (for the treatment of tardive dyskinesia), ONGENTYS (for Parkinson's disease), ORILISSA (for severe pain associated with endometriosis), and ORIAHNN (for uterine fibroids).  NBIX developed ORILISSA and ORIAHNN in collaboration with AbbVie Inc.

NBIX Product Pipeline (Source: Corporate Presentation, August 03, 2021)

Completion of enrollment in Phase III Kinect-HD Study: On August 5, 2021, NBIX announced that patient enrollment for its Phase 3 (KINECT-HD) clinical study to assess the effectiveness and safety of valbenazine, an orally active vesicular monoamine transporter, was completed in collaboration with Huntington Study Group, a non-profit institution comprised of the world's first and largest collaborative network of experts in Huntington disease (HD). By the end of 2021, NBIX expects to release the top-line data from the clinical research results.

6MFY21 Results: The company reported a slight decline of 2.60% in total revenues to USD 525.5 million during 6MFY21 (ended June 30, 2021) compared to USD 539.5 million during 6MFY20, primarily due to a decline in collaboration revenue. In addition, NBIX witnessed a decline in net income to USD 74.4 million during 6MFY21 vs. USD 117.0 million during 6MFY20. As of June 30, 2021, its cash and cash equivalents (including short-term investments) were USD 884.90 million, with a total debt of USD 326.30 million.

Key Risks: NBIX's two largest clients accounted for over 86% of product revenues in both FY20 and FY19, as well as most of its accounts receivable balances. Excessive reliance on a small number of customers for revenue could harm the company's financial health. INGREZZA product sales also account for a significant portion of its top-line and earnings, putting it at risk of product concentration.

Outlook:

FY21 Expense Guidance (Source: Corporate Presentation, August 03, 2021)

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.

NBIX Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: NBIX's stock price fell 25.03% in the past six months, is currently trading close to the lower band of its 52-week range of USD 84.85 to USD 120.27. In addition, the stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 31.28. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 105.04. Considering the correction in the stock price in the past six months, solid track record, strong product pipeline, and growth potential, we recommend a "Buy" rating on the stock at the current price of USD 86.50, up 0.37% as of August 12, 2021, 2:46 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.

SelectQuote, Inc.

SLQT Details

SelectQuote, Inc. (NYSE: SLQT) is a technology-driven, direct-to-consumer (DTC) distribution platform for senior health, life, auto, and home insurance plans from a panel of major insurance companies across the nation. The company makes money by selling insurance products on behalf of insurance carrier partners for a commission. SLQT is divided into three segments: 1) SelectQuote Senior, offering Humana, UnitedHealthcare, and Aetna insurance companies' Medicare Advantage (MA), Medicare Supplement (MS), and dental, vision, and hearing (DVH) insurance plans; 2) SelectQuote Life, offering term and permanent life insurance plans and other allied policies; and 3) SelectQuote Auto, which provides auto, home, and specialty insurance policies underwritten by approximately 30 nationally recognized insurance carriers.

Adding Insurance Carrier Partner: SLQT announced its partnership with Zing Health on August 3, 2021, for Medicare consumers in Indiana, Illinois, Michigan, Chicago, Detroit, and Indianapolis. Zing Health is a tech-enabled insurance firm offering Medicare Advantage to individuals aged 65 and over and those with long-term disabilities. As the demand for Medicare continues to rise, adding Zing to the platform will benefit the company in the long run.

Heal Joins SLQT's Platform: SLQT announced that Heal, Inc., a home-based primary care provider, joined Population Health's sophisticated patient engagement model on June 30, 2021. With the extended collaboration, Heal and its current patients will have access to the entire Population Health ecosystem of physicians and partners, emphasizing improving health outcomes while lowering total healthcare costs.

Expansion into Healthcare Services: On May 3, 2021, SLQT debuted its Population Health platform to improve medication adherence, health literacy, and patient engagement among the elderly. Partnerships with premier value-based primary care physicians and specialty drug management pharmacies are the foundations of Population Health.

Q3FY21 Results: The company reported a sharp uptick of 79.62% in total revenue to USD 266.92 million in Q3FY21 (ended March 31, 2021) compared to USD 148.60 million in Q3FY20, primarily due to an increase in Senior and Life commission revenues. SLQT recorded an adjusted EBITDA of USD 65.19 million in Q3FY21 compared to USD 44.05 million in Q3FY20. In addition, the company witnessed a significant increase in net income to USD 36.48 million in Q3FY21 vs. USD 23.72 million in Q3FY20.

Financial Metrics (Source: Q3FY21 Earnings Presentation, May 11, 2021)

Key Risks: UnitedHealthcare, Humana, and Aetna, the company's top three insurance carrier partners, collectively accounted for 55% and 49% of total revenues in FY20 and FY19, respectively. Over-reliance on certain insurance partners for business could have a long-term negative impact on the company's financial operations. Furthermore, insurance businesses have the option of selling products and services directly to consumers or through competitors.

Outlook:

FY21 Guidance (Source: Q3FY21 Earnings Presentation, May 11, 2021)

Valuation Methodology: Price/Earnings 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.

SLQT Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: SLQT stock price fell by 47.58% in the past six months and created a 52-week low today. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 21.26. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 17.12. Considering the company's growth prospects, strategic expansion initiatives, improving profitability, and current valuation, we recommend a "Buy" rating on the stock at the current price of USD 13.98, down by 19.10% as of August 12, 2021, 2:20 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.