Johnson & Johnson

JNJ Details

JOHNSON & JOHNSON (NYSE: JNJ) is a holding company that is engaged in the research and development, manufacturing, and distribution of a variety of healthcare products. Its operating segments are Consumer, Pharmaceutical and Medical Devices. In Q3FY21, The US accounted for 51.26% of JNJ’s total revenue. As of October 21, 2021, the company's market capitalization stood at USD 430.15 billion.

Latest News:

• Payment of Dividend: On October 21, 2021, JNJ declared a quarterly dividend of USD 1.06 per common share, payable on December 07, 2021, to shareholders of record on November 23, 2021.
• WHO Authorization: The Advisory Committee on Immunization Practices (ACIP) of the US Centers for Disease Control and Prevention (CDC) has approved JNJ's COVID-19 vaccine as a booster for all eligible persons who have received an authorized COVID-19 vaccination.

Q3FY21 Results:

• Growth in Revenue: The company reported a YoY growth of 10.70% in revenue to USD 23.34 billion during Q3FY21 (ended October 03, 2021) from USD 21.08 billion during Q3FY20, attributable to YoY growth of 80% in international segment.
• Segment Results: The Pharmaceutical segment, which accounted for 55.68% of the total revenue in Q3FY21, reported an YoY increase of 13.80%, whereas the Medical Devices segment improved 8.03% YoY.
• Improvement in Profitability: JNJ reported a growth in net income to USD 3.67 billion during Q3FY21 vs. USD 3.55 billion in Q3FY20.

Key Risks:

• Dependence On Third Party Manufactures: JNJ is dependent on third-party manufacturers for its certain products. Therefore, any discord with these third parties could adversely impact its operations.
• Competition Risk: JNJ operates in the highly competitive health care industry and faces intense competition in each of its segments across geographies. Any advanced innovation or superior product development by its competitors could impact its operations.

Outlook:

• Revenue Estimate: As of Q3FY21, JNJ expects its FY21 revenues (including Covid-19 vaccine) to range between USD 94.1 – 94.6 billion, thus realizing a YoY growth of 13.9% - 14.5%.
• EPS Estimate: For FY21, JNJ forecasts its Adjusted EPS to range between USD 9.77 – 9.82, achieving YoY growth of 21.7% - 22.3%

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.

JNJ Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

JNJ's stock price declined 3.87% in the past three months and is currently leaning towards the higher end of its 52-week range of USD 133.65 to USD 179.92. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 51.05. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 182.18.

Considering the company's growth prospects, solid margins, current valuation, and associated risks, we recommend a "Hold" rating on the stock at the closing price of USD 163.40, as of October 21, 2021.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV. 

Newmont Corporation

NEM Details

Newmont Corporation (NYSE: NEM) is a gold mining company engaged in the production and exploration of gold, copper, silver, zinc, and lead. It operates in the United States, Canada, Mexico, Dominican Republic, Peru, Suriname, Argentina, Chile, Australia, and Ghana. As of October 21, 2021, the company's market capitalization stood at USD 45.69 billion.

Latest News:

• Key Recruitment: On October 19, 2021, NEM appointed Peter Toth as its Executive Vice President, Strategic Development, effective July 1, 2022. Mr. Toth carries the experience of 25 years in the mining industry and is tasked to drive strategic growth for the companies stakeholders.
• Updates on Boddington Mine: On October 5, 2021, NEM provided the gold industry's first Autonomous Haulage System (AHS) fleet At Boddington, Western Australia's largest gold mine. NEM aims to improve mine safety and productivity while extending mine life by transitioning to a completely autonomous haulage fleet of 36 trucks.
• Payment of Dividend: On July 21, 2021, NEM declared a quarterly dividend of USD 0.55 per common share, paid on September 23, 2021, to shareholders of record on September 09, 2021.

Q2FY21 Results:

• Significant Growth in Revenue: The company reported a YoY growth of 29.60% in revenues to USD 3.07 billion during Q2FY21 (ended June 30, 2021) from USD 2.37 billion during Q2FY20, attributable to higher sales volume complemented by favorable pricing.
• Drivers of Organic Growth: Gold attributable production increased by 15.46% from 1,255 koz (thousand ounces) in Q2FY20 to 1,449 koz, whereas the Average Realized Price improved to 1,823 $/oz (USD/Ounce) in Q2FY21 from 1,724 $/oz in Q2FY20.
• Surge in Profitability: NEM reported a sharp uptick in net income to USD 640 million during Q2FY21 vs. USD 412 million in Q2FY20.
• Cash and Debt Position: As of June 30, 2021, the company had cash and cash equivalents (including short term investment) of USD 4.81 billion and total debt of USD 6.16 billion.
• Share Repurchase: During Q2FY21, NEM repurchased USD 149 million of stock from USD 1 billion buyback program.

Key Risks:

• Commodity Price Risk: Prices of gold, silver, copper, zinc, and lead on the global market, which are highly volatile and uncontrollable, significantly impact NEM's business. Hence, any unfavorable movement in their prices could negatively impact its financials.
• Regulatory Risk: NEM operates as a gold mining company, which is subject to several federal and state regulations. Therefore, the issuance of stricter regulations or non-compliance with required laws could adversely affect the company's profitability.

Outlook:

Five Year Cost and Production Outlook (+/- 5%) (Source: Q2FY21, Earnings Presentation)

• In FY21, NEM expects to incur USD 260 million and USD 390 million towards General & Administrative and Exploration & Advanced Projects expenses, respectively.
  

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.

NEM Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

NEM's stock price rose 4.90% in the past month and is currently leaning towards the lower end of its 52-week range of USD 53.03 to USD 75.31. The stock is currently trading between its 50 and 200 DMA levels, and its RSI Index is at 57.52. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 63.94.

Considering the company's production outlook, solid margins, current valuation, and associated risks, we recommend a "Hold" rating on the stock at the closing price of USD 57.18 as of October 21, 2021.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV. 

Church & Dwight Co., Inc.

CHD Details

Church & Dwight Co., Inc. (NYSE: CHD) is a developer, manufacturer, and distributor of variety of consumer household and personal care products and specialty products focused on animal and food production, chemicals, and cleaners. CHD markets its consumer products via its 13 power brands. As of October 21, 2021, the company's market capitalization stood at USD 20.58 billion.

Latest News:

• Payment of Dividend: On July 28, 2021, CHD declared a quarterly dividend of USD 0.25 per common share, paid on September 01, 2021, to shareholders of record on August 16, 2021.

Q2FY21 Results:

• Growth in Revenue: The company reported a YoY growth of 6.43% in revenues to USD 1.27 billion during Q2FY21 (ended June 30, 2021) from USD 1.19 billion during Q2FY20, driven by higher demand for the company’s products.
• Improvement in Profitability: CHD reported growth in net income to USD 218.3 million during Q2FY21 vs. USD 189.7 million in Q2FY20.
• Cash and Debt Position: As of June 30, 2021, the company had cash and cash equivalents of USD 149.8 million and total debt of USD 1.95 billion.

Key Risks:

• Customer Concentration Risk: Walmart was the company’s largest customers in FY20, accounting for roughly 23% the net sales. Further, the top three customers accounted for ~36% of CHD’s sales during the fiscal. Hence, the loss of any of these key customers could hurt its financials.
• Competition Risk: CHD operates in the consumer products industry and faces direct competition from established players such as The Proctor & Gamble Company, Colgate-Palmolive Company, Henkel, Reckitt Benckiser Group plc, Johnson & Johnson, and others. Hence, any unfavorable movement in demand for CHD’s products could cause pricing pressure on the company and loss of market share, which could adversely impact its results of operations.

Outlook:

• As of Q2FY21, CHD forecasts organic sales growth of ~4% and net sales growth of ~5% in FY21. It also expects Adjusted EPS growth in the range of 6% - 8% and generating cash flow from the operation of ~USD 950 million in FY21.
  

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.

CHD Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

CHD's stock price declined 1.60% in the past three months and is currently trading close to mid-band of its 52-week range of USD 77.62 to USD 99.53. The stock is currently trading between its 50 and 200 DMA levels, and its RSI Index is at 54.62. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 93.01.

Considering the company's sales growth prospects, solid margins, current valuation, and associated risks, we recommend a "Hold" rating on the stock at the closing price of USD 83.80, as of October 21, 2021.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV. 

Clean Energy Fuels Corp.

CLNE Details

Clean Energy Fuels Corp. (NASDAQ: CLNE) is a renewable energy company engaged in the procurement and distribution of renewable natural gas (RNG) and conventional natural gas, in the form of compressed natural gas (CNG) and liquefied natural gas (LNG), for the United States and Canadian transportation markets. As of October 21, 2021, the company's market capitalization stood at USD 1.95 billion.

Latest News:

• Key Commercial Contract: On October 07, 2021, CLNE reported that it had secured a competitive solicitation to design, build, and manage a hydrogen station and supply liquid hydrogen fuel for Foothill Transit, an environment-friendly bus service in Southern California with 14 million annual rides.Previously, on September 21, 2021, CLNE signed a contract with World Fuel Services, Inc. to supply ~78 million gallon of LNG for two Pasha Hawaii container ships.

Q2FY21 Results:

• Significant Decline in Revenue: The company reported a YoY decline of 99.20% in revenues to USD 0.48 million during Q2FY21 (ended June 30, 2021) from USD 59.87 million during Q2FY20, attributable to 78% YoY contraction in Product revenue.
• Expansion of Net Losses: CLNE reported a sharp uptick in net loss to USD 79.67 million during Q2FY21 vs. USD 6.74 million in Q2FY20.
• Cash and Debt Position: As of June 30, 2021, the company had cash and cash equivalents (including short term investments) of USD 254.25 million and total of debt USD 41.66 million.

Key Risks:

• Customer Concentration Risk: Revenue from the government entities represented 22% of the total FY20 revenue. Therefore, the loss of critical contracts or unfavorable changes in the relation with the US government could impair its financials.
• Competition Risk: CLNE operates in a highly competitive vehicle fuel industry, and its product competes directly with gasoline and diesel in all its key markets. It also faces competition from suppliers of other alternative vehicle fuels and producers and fuelers of alternative vehicles, including hybrid, electric and hydrogen-powered vehicles. Should this competition intensify further, it could be detrimental to CLNE’s operating performance.

Outlook:

• As of Q2FY21, CLNE expects its FY21 EBITDA to range between USD 60 – 62 million, along with a net loss of USD 76 – 86 million.

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.

CLNE Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

CLNE's stock price rose 12.34% in the past month and is currently leaning towards the lower end of its 52-week range of USD 2.39 to USD 19.79. The stock is currently trading between its 50 and 200 DMA levels, and its RSI Index is at 53.60. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 9.67.

Considering the company's expectation of recovery from COVID-19, current valuation, and associated risks, we recommend a "Hold" rating on the stock at the closing price of USD 8.74, down 2.56% as of October 21, 2021.

* 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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