Hyliion Holdings Corp

HYLN Details

Update on Business Combination with Tortoise: Hyliion Holdings Corp (NYSE: HYLN) provides electrified powertrain solutions for commercial vehicles. The market capitalization of the company as on 07 January 2021, stood at ~$2.73 billion. The strategic combination between Hyliion Inc. and Tortoise Acquisition Corp. was completed on October 1, 2020, and the combined entity was renamed as ‘Hyliion Holdings Corp’. The merger yielded ~$520 million in net proceeds to HYLN.

Redemption of Public Warrants: In a recent update, the company announced the exercise of the Public Warrants that expired on December 30, 2020. Under this transaction, HYLN received ~$142 million in cash proceeds on exercise of Public Warrants for ~12.5 million shares of common stock.

Q3FY20 Update: During the quarter, the company installed eight hybrid electric units for four fleet-based customers. It also made developments toward commercialization of its Hybrid and Hypertruck ERX solutions for the Class 8 truck market. The company did not generate any revenue in the given quarter. It made a loss of $2.77 million, compared to a profit of $0.73 million in Q3FY19. The company exited the quarter with a cash balance of $7.56 million, with long-term debt amounting to $4.13 million.

Q3FY20 Financial Results (Source: Company Reports)

Outlook: HYLN is positive on its prospects, after the strategic combination with Tortoise and is focused to position the company for long-term growth by capturing the market for the electrification of class 8 vehicles.

Stock Recommendation:  The company is anticipating traction for its solutions in the near-term, and is planning to develop a scaled infrastructure to take advantage of opportunities in the ~$800 billion market. HYLN gave a negative return of ~6.47% in the past one month. The stock of HYLN is trading below its average 52-week trading range of $ 58.66-$ 9.50. On a technical front, the stock of HYLN has a support level of $15.49 and a resistance level of $20.10. Considering the current trading levels, decent outlook from the strategic business combination, decent liquidity position and notable development towards commercialization of its products, we recommend a ‘Buy’ rating on the stock at the closing price of $ 17.78, up by 9.69% as on January 7, 2021.

HYLN Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Selecta Biosciences, Inc.

SELB Details

Orphan Drug Designation for MMA-101: Selecta Biosciences, Inc (NASDAQ: SELB) is a biotechnology company using its platform to develop tolerogenic therapies, that reduces unwanted immune responses. The market capitalization of the company as on 07 January 2021, stood at ~$351.09 million. In a recent update, the company has announced that AskBio and SELB have received orphan drug designation for MMA-101 to treat Methylmalonic Acidemia from the USFDA.

Q3FY20 Financial Update: During the quarter, the company reported top-line data from the Phase 2 Compare trial of SEL-212. SELB reported revenues of $4.6 million during the period, with $4.3 million recognized under the license agreement with Sobi. The company did not generate any revenue during the pcp. There was a net loss of $9.7 million in Q3FY20, compared to a loss of $12 million during Q3FY19. The company ended the quarter with a cash balance of $146.26 million and a long-term loan payable of $24.58 million.

Q3FY20 Financial Performance (Source: Company Reports)

Outlook: The reporting of top-line data from the Phase 2 Compare trial during Q3FY20, reflected the scope of the company’s ImmTOR platform. SELB also started the Phase 3 Dissolve program in a partnership with Sobi.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

EV/Sales Multiple Based Relative Valuation (Source: Refinitiv, Thomson Reuters)

Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Months

Stock Recommendation: The company will continue to focus on developing its pipeline with its gene therapy programs in MMA and OTC deficiency, and its enzyme program in IgA nephropathy. SELB gave positive returns of 68.39% in the past three months and 47.05% in the past nine months. The stock of SELB is trading above its average 52-week trading range of $ 4.83-$ 1.42. On a technical front, the stock of SELB has a support level of $2.9 and a resistance level of $3.8. We have valued the stock using an EV/Sales multiple-based illustrative relative valuation and have arrived at a target price with a correction of low single-digit (in % terms). For the purpose, we have taken peers such as Horizon Therapeutics PLC (NASDAQ: HZNP), Merck & Co Inc (NYSE: MRK), Global Blood Therapeutics Inc (NASDAQ: GBT), to name a few. Considering the steep price movements in the past months, and current trading level, we suggest investors to book profit and give a ‘Sell’ rating on the stock at the closing price of $3.25, up by 2.85% as on January 7, 2021.

SELB Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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