Materials
The can-maker’s equity is expected to come under further pressure - the main concerns cited in Gradient’s 13-page report include: 1) Volume and profitability headwinds. 2) Inventory growth higher than targeted and has outpaced forward sales estimates. 3) Growth in receivables suggests a pull-forward of revenue. 4) Accrued compensation fell to a five-year low relative to adjusted operating expenses. 5) Despite the recent share-price correction, BALL still appears expensive. Other active shorts Gradient have initiated coverage on this year include ADT, Cerence, Lamb Weston, Owen’s & Minor and RingCentral.
Edition: 140
- 22 July, 2022
Technology
Downside risk remains despite sell-off - Gradient’s main concerns include: 1) RNG operates in a highly and increasingly competitive industry. 2) Forward growth is dependent on continued success in transitioning legacy business comms. 3) Signs that RNG is drawing on contract sales at a faster rate than it has in the past. 4) Deferred compensation is becoming a rising headwind to margins. 5) Stock-based compensation is driving unsustainable cash-flow assumptions. A brief video introduction to Gradient’s report can be found here.
Edition: 127
- 21 January, 2022
Technology
RNG has one of the best product portfolios in the UCaaS market as well as relationships with legacy vendors and service providers which will drive growth. Termination of the Zoom/Five9 merger will benefit RNG in the enterprise segment of the market. Expect the company to continue to beat estimates when it reports in November. TP $300 (~25% upside)
Edition: 121
- 15 October, 2021