Cadence Design Systems, Inc.

CDNS Details

Cadence Design Systems, Inc. (NASDAQ: CDNS) provides electronic product development solutions to its clients. Its product categories include Custom IC Design and Simulation, Digital IC Design and Signoff, Functional Verification, Intellectual Property (IP), and System Design and Analysis. It generates revenue through licensing its software and intellectual property, selling or leasing emulation and prototyping hardware technologies, providing software, hardware, and IP maintenance, offering engineering services, and generating royalties from the usage of IPs.

Picocom Ramps Up its 5G Communications Using CPE: Picocom, a 5G open RAN baseband semiconductor company, has deployed the Cadence Palladium Emulation (CPE) Platform to accelerate the verification and pre-silicon software validation of its system-on-chip (SoC) designs for 5G radio access network (RAN) applications, according to a CDNS announcement on August 18, 2021. Picocom used CPE to achieve quicker hardware and software integration, with an emulation speedup of 1000X.

6MFY21 Results: The company reported a 16.55% rise in total revenue to USD 1.46 billion during 6MFY21 (ended July 03, 2021) compared to USD 1.26 billion during 6MFY20 (ended June 27, 2021), primarily due to an increase in usage of electronic systems by the customers. In addition, CDNS reported an increase in net income to USD 343.07 million during 6MFY21 vs. USD 255.28 million during 6MFY20. As of July 03, 2021, its cash and cash equivalents were USD 847.16 million, with a total debt of USD 347.19 million.

Key Risks: In general, CDNS have a lengthy sales cycle that might last six months or longer. The complexity and cost of its goods and services typically necessitate a lengthy client education, assessment, and approval procedure. Long sales cycles for hardware goods expose CDNS to various significant risks, including excess or obsolete inventory, changes in inventory valuation, and other factors that might impact the company's financial health and cash flows.

Outlook: As of Q2FY21, CDNS expects its total revenue for Q3FY21 to range from USD 730 million to USD 750 million, with a GAAP operating margin of about 23%. The GAAP net income per diluted share is estimated to range between USD 0.48 and USD 0.50. For FY21, the total revenue is expected to range between USD 2.925 billion and USD 2.965 billion, with a 24.5% - 25.25% GAAP operating margin. The estimated range for FY21 GAAP net income per diluted share is USD 2.15 to USD 2.21.

Valuation Methodology: Price/Earnings per share 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.

CDNS Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: CDNS share price has shot up 43.00% in the past twelve months and made a fresh 52-week high today. The stock is currently trading significantly above its 50 and 200 DMA levels, and its RSI Index is at 72.57. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 146.86. Considering the significant rise in the stock price, we believe it adequately reflects the decent business fundamentals. Hence, we recommend a "Sell" rating on the stock at the current price of USD 158.12, up 0.93% as of August 23, 2021, at 12:01 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.

ADMA Biologics, Inc.

ADMA Details

ADMA Biologics, Inc. (NASDAQ: ADMA) is a commercial biopharmaceutical business focusing on manufacturing, marketing, and developing specialized plasma-derived biologics to treat immunodeficient individuals at risk of infection as well as those at risk of certain infectious disorders. ADMA's commercially available products include: 1) BIVIGAM, an IVIG product specifically for the treatment of Primary Humoral Immunodeficiency (PI), also known as Primary Immunodeficiency Disease (PIDD); 2) ASCENIV, an IVIG product indicated for the treatment of PI; and 3) Nabi-HB, which is suggested for the treatment of acute exposure to blood containing Hepatitis B surface antigen (HBsAg) and other exposures to Hepatitis B.

Expansion of Plasma Collection Facilities: On August 16, 2021, ADMA stated that it had obtained the US Food and Drug Administration (FDA) clearance for its BioCenters plasma collection facility in Maryville, Tennessee. The plasma collection plant became operational in Q4FY20 and began collecting donor plasma. By 2024, ADMA expects to have at least ten FDA-approved plasma collecting facilities. Previously, on August 10, 2021, ADMA announced the commencement of operations at its newest BioCenters plasma collection facility in Conyers, Georgia.

6MFY21 Results: The company reported an 88.35% rise in total revenue to USD 33.88 million during 6MFY21 (ended June 30, 2021) compared to USD 17.99 million during 6MFY20, primarily due to the expansion of its customer base. ADMA also reported a slight decline in net losses to USD 37.29 million during 6MFY21 vs. USD 39.42 million during 6MFY20. As of June 30, 2021, its cash and cash equivalents were USD 42.41 million, with total debt (senior notes payable) of USD 93.88 million.

Key Risks: ADMA relies heavily on third-party vendors to fill, package, test, and label the medicines it manufactures. Therefore, any substantial difficulty encountered by third parties in delivering their services might cause a delay in the availability of the final product and harm the company's commercialization efforts and revenues. Further, ADMA's five major clients (BioCare, Biolife, Reliance, Curascript, and AmerisourceBergen) accounted for more than 85% of its consolidated revenues during 6MFY21. Excessive reliance on a limited number of clients for income could adversely impact its financial sustainability.

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.

ADMA Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: ADMA's stock price fell 47.85% in the past six months and is currently trading towards the lower-band of the 52-week range of USD 1.15 to USD 3.71. Daily, lower highs and lower lows are visible in price action. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is 37.44, with the formation of the Bearish Marubozu candle on the weekly chart, also indicated by the creation of various fresh lows on a closing basis after March 18, 2021. This indicates the stock is in a firm bear grip and is currently trading in unchartered territories.

We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 1.18. Considering the technical indicators, expansion plans, continuous operating losses, weak structure, and other associated risks, we recommend a "Sell" rating on the stock at the current price of USD 1.34, up 9.43% as of August 23, 2021, at 3:12 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.

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