Tag: Recommendations

despite the headwind from generic Kuvan. BioMarin raised guidance for each of these drugs based on sales in the first half of the year, leading to expected non-GAAP income of $190-$240 million for the year, up from prior guidance of $170-$220 million.

Recent data indicates that Roctavian has continued durability of efficacy through five years, although factor VIII levels continue to decline over time, hinting that the efficacy of BioMarin’s gene therapy will not last a lifetime. Despite this, we think there is still a place for Roctavian, especially considering its significant lead over other gene therapy programs as well as the likely positive reception from patients.

Company’s Future Outlook

Two drug candidates continue to drive our expectation for significant increases to revenue growth beginning in 2022. BioMarin expects European approval of Voxzogo (vosoritide for achodroplasia) in the third quarter and Roctavian (hemophilia a gene therapy) in the first half of 2022. In the U.S., we expect Voxzogo to gain approval by its PDUFA date in November 2021, and Roctavian should be filed with the FDA in the second quarter of 2022, once two-year data from the phase 3 studies is available in early 2022.

In addition, the Institute for Clinical and Economic Review also determined that a potential price tag of $2.5 million would be cost effective based on three years of efficacy data, which gives us confidence in our blended global price tag of roughly $1.2 million per patient.

Company Profile

BioMarin’s focus is on rare-disease therapies. Genzyme (now part of Sanofi) markets Aldurazyme through its joint venture with BioMarin, and BioMarin markets Naglazyme, Vimizim, and Brineura independently. BioMarin also markets Kuvan and Palynziq to treat the rare metabolic disorder PKU (in addition to long-standing U.S. rights, BioMarin has reacquired international rights for Kuvan and Palynziq from Merck KGaA). BioMarin’s Roctavian (hemophilia A gene therapy) and vosoritide (treatment for achondroplasia) are poised to potentially launch in the 2021-22 timeframe.

(Source: Morningstar)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Weibo’s recent content enhancements include video accounts (similar to Weixin’s), video pages with both professionally generated content and user-generated content (similar to YouTube channels), the discovery zone (where users can find the popular discussion topics at the main entrance of Weibo), and vertical videos focused on user-generated content.

With the increasing importance of more focused marketing and return on investment for advertisers, Weibo has started to catch up. For example, Weibo introduced optimized cost per x model in 2019. Advertisers can also evaluate their sales conversion on Tmall from the fans accumulated through advertising campaigns on Weibo in collaboration with Alibaba through the uni-marketing program. We expect to see increasing product development costs in the next few quarters. We believe investment in research and development is vital for Weibo even if that means near-term margin compression.

To improve small and medium-size enterprise ad revenue, Weibo is expanding into untapped and faster-growing verticals such as Taobao merchants, online education, and online gaming by restructuring its sales team since 2019. For example, it has enhanced cooperation between sales and technical teams to provide customized services to top SMEs of key verticals. The success of the new model is unclear because of the disruption from COVID-19.

Financial Strength

Weibo has a strong balance sheet with a net cash position of $1.06 billion as of December 2020. The company started to make a profit in the second quarter of 2015. Operating leverage has increased significantly in recent years; the operating margin improved from 7.8% in 2015 to 25.5% in 2018 and 30.0% in 2020. This has helped the company to generate free cash flow from 2015 to 2020. The company has significantly beefed up its cash war chest through operating activities and note issuances in the past few years. The balance sheet displayed an increase in long-term investments from $695 million in December 2018 to $1,179 million in December 2020, while generating operating cash flow of $742 million during 2020. We expect Weibo to continue to make long-term strategic investments with its cash. We do not expect it to pay dividend in the next few years. As of March 30, 2021, Moody’s assigned a Baa2 (previously Baa1) issuer rating to Weibo with a stable outlook (previously negative). Moody’s been concerned about using Weibo’s assets and cash to service or repays the privatization debt of Sina.

Bulls Say

• Weibo has been able to sustain its status as the go to platform for following top trends and topics and celebrities.

• Weibo puts more focus on return on investment for advertisers and now provides optimized cost per x.

• Weibo upgraded its ad platform to enhance marketing scenarios, ad formats, algorithms, and Big Data analysis to increase its competitiveness.

Company Profile

Weibo is the largest social media platform in China. As of 2020, Weibo had 521 million monthly active users and 225 million daily active users, many of whom are drawn there by the millions of key opinion leaders in entertainment, sports, and business circles. Sina is the major shareholder, holding 44.7% of shares and with 70.8% voting power; Alibaba holds 29.8% of shares and 15.7% voting power

(Source: Morningstar)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Shaw has made significant efforts to improve its wireless network and is now bundling wireless with wireline service to customers in its cable footprint, enabling it offer even better value and enhancing service when offloaded onto its Wi-Fi network. Between the ends of fiscal years 2016 and 2020, Shaw more than doubled its postpaid wireless subscriber base, increased average billings per user (ABPU) by 20%, and expanded its wireless EBITDA margin by 900 basis points. The firm continues to invest heavily to improve its wireless network, and we think the firm is a legitimate competitor for new wireless customers and will continue seeing wireless results trend upwards.

Shaw ended fiscal 2020 with 5.3 million wireline revenue generating units, or RGUs, down from 6.4 million RGUs in 2012. The losses are attributable to television and voice customers, which face secular challenges for all competitors, but even Internet customer growth has been anemic (up 2% since 2017, including customer losses in 2020). Shaw has materially underperformed Telus across all types of RGUs. Telus has grown its Internet customer base by 22% since 2017 while also adding television customers. Its RGU base has grown from to 4.5 million from 3.8 million in 2012.

Shaw’s total revenue was up 5% year over year, though growth would’ve been only 3% excluding a benefit from a recent regulatory decision. The firm’s EBITDA margin was up 30 basis points year over year but was significantly better. Average billings per user, or ABPU, was down to CAD 40.56 from CAD 44.27 in the year-ago period. We’ve expected significant ABPU compression as the firm pushes Shaw Mobile, where Shaw’s wireline customers can add wireless service for extraordinarily low prices, but the 8.5% drop was more than we anticipated, especially given that net additions were muted. The firm added fewer than 47,000 postpaid wireless subscribers.

Financial Strength

Shaw is currently in a good financial position, which we think is critical, as it will need the flexibility in the coming years. At the end of fiscal 2020, Shaw had over CAD 700 million in cash and CAD 4.5 billion in long-term debt, which represented 1.6 times net debt to adjusted EBITDA—below its target ratio of 2.0-2.5 and well below those of Shaw’s big competitors in its industry. Shaw’s coverage ratio (adjusted EBITDA to interest expense) ended 2020 at 8.7, and the company has CAD 1.5 billion available on a revolving credit facility. Shaw has no long-term debt maturing until the end of 2023.

Wireless competition

• Shaw is doing all the right things to build up its wireless business, acquiring and building out sufficient assets and luring customers by offering great deals.
• The Canadian government is keen on bringing wireless competition to the big three incumbents. Unlike previous national upstarts, Shaw’s strong financial position and family control afford it the time and money to stick with a long-term strategy to succeed.
• Shaw’s move to bundle wireless and wireline service with Shaw Mobile could expedite its wireless share gains and stem wireline losses it has seen recently.

Company Profile

Shaw Communications is a Canadian cable company that is one of the biggest providers of Internet, television, and landline telephone services in British Columbia, Alberta, Saskatchewan, Manitoba, and northern Ontario. In fiscal 2020, more than 75% of Shaw’s total revenue resulted from this wireline business. Shaw is also now a national wireless service provider after acquiring Wind Mobile in 2016. Shaw has upgraded its wireless network, undertaken an aggressive pricing strategy, and significantly enhanced its spectrum holdings. As a smaller carrier, Shaw has favored bidding status in spectrum auctions, giving it a further boost in enhancing its wireless network. At the 2019 auction, Shaw added significant amounts of 600 MHz spectrum to the 700 MHz spectrum it is currently deploying.

(Source: Morningstar)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

While the market for acute care EHR is mature and offers little growth, the firm has been able to expand into other areas, such as ambulatory (outpatient) care and secure clients in the federal space, notably with the Department of Defense (DOD) and Department of Veterans Affairs (VA). Combined, these contracts offer $20 billion in revenue to be recognized ratably per site implementation by 2028. Additionally, Cerner has started to cross-sell incremental analytics services to fortify retention rates. Incremental services are largely recurring in nature and include analytics, tele health, and IT outsourcing.

Financial Strength

Revenue is growing steadily as the rollout of Cerner’s HER platform at the DoD and VA commence, and incremental services to existing customers and international expansion add to the muted growth of the mature domestic HER market. Non-GAAP margins are already solid, and we believe they are likely to expand further with the active rationalization of services with lower profitability and cost-saving initiatives. As of fiscal 2020, the company had over $1 billion in cash, equivalents, and investments. Cerner initiated a quarterly dividend of $0.18 per share in mid-2019, which it subsequently raised to $0.22 per share at the end of 2020.

Bulls Say

• Cerner has been able to maintain a leading market share in the acute care EHR market due to high switching costs.
• Despite the maturity of the domestic EHR market, Cerner’s federal contracts provide modest revenue growth through 2028.
• Cerner’s leading EHR market share gives the company valuable RWE that can be packaged and sold to pharma companies, payers, and providers in a data offering.

Company Profile

Cerner is a leading supplier of healthcare information technology solutions and tech-enabled services. The company is a long-standing market leader in the electronic health record (EHR) space, and along with rival Epic Systems corners a majority of the market for acute care EHR within health systems. The company is guided by the mission of the founding partners to provide seamless medical records across all healthcare providers to improve outcomes. Beyond medical records, the company offers a wide range of technology that supports the clinical, financial, and operational needs of healthcare facilities.

(Source: Morningstar)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.