Daily Update - March 16, 2023

Selected highlights of the day

By: Matthew Otto

 

Halozyme Therapeutics

Has announced that the European Patent Office (EPO) has made a decision regarding one of Janssen Biotech’s co-formulation patents for DARZALEX® (daratumumab) SC. Despite the EPO’s decision, Halozyme maintains its confidence in the royalty revenue potential and does not expect any impact on its 2023 revenue guidance or on U.S. and European royalty revenues from DARZALEX FASPRO® and SC through at least 2030. The company anticipates a total royalty revenue projection of approximately $1 billion by 2027.

Halozyme announced the Opposition to the  Division’s decision to revoke Janssen’s European Patent EP3370770B1and will await a written decision within the next few months.

  • Wells Fargo analyst Mohit Bansal maintains an Overweight rating on Halozyme but has lowered his price target from $65 to $55.
  • SVB Leerink analyst David Risinger has downgraded Halozyme from Outperform to Market Perform and set a new price target of $42.

TikTok being questioned

The Biden administration is reportedly demanding that ByteDance, the Chinese tech company, sell the U.S. arm of its popular short video service TikTok or face a potential ban. This development follows the White House’s support for the Restrict Act, a bipartisan measure aimed at setting new rules for foreign tech firms and granting the commerce secretary power to ban certain services.

The Committee on Foreign Investment in the U.S. (CFIUS) has allegedly told ByteDance to find a buyer for its U.S. business. TikTok has responded, stating that divestment by ByteDance would not address the security concerns raised by the White House and some members of Congress. The company argues that protecting national security should involve transparent, U.S.-based protection of user data and systems, with robust third-party monitoring and verification, which TikTok claims it is already implementing.

  • JMP Securities analyst Andrew Boone has reiterated a Market Outperform rating for Meta Platforms (formerly known as Facebook) and maintained a price target of $240.

UiPath

Has reported its financial results for the fourth quarter and full fiscal year 2023, which ended on January 31, 2023. The company showed strong growth in the fourth quarter, with annual recurring revenue (ARR) increasing by 30% YoY to reach $1.204 billion. This was driven by net new ARR of $94 million.

In Q4, UiPath’s revenue increased by 7% YoY to $308.5 million, and the company posted a non-GAAP operating margin and positive non-GAAP adjusted free cash flow. UiPath’s GAAP gross margin was 85%, and non-GAAP gross margin was 87%.

For the full fiscal year 2023, the company recorded a 19% YoY increase in revenue, totaling $1.059 billion, and net new ARR of $278.6 million. The GAAP gross margin was 83%, and the non-GAAP gross margin was 86%.

UiPath’s strong performance can be attributed to its AI-powered Business Automation Platform, which helps organizations maintain a competitive edge and increase operating agility. The company’s outlook for the full fiscal year 2024 includes a 350 basis point increase in non-GAAP operating margin and positive non-GAAP adjusted free cash flow.

For the first quarter fiscal 2024

UiPath expects: Revenue in the range of $270 million to $272 million ARR in the range of $1.245 billion to $1.250 billion as of April 30, 2023 Non-GAAP operating income of approximately $5 million For the fiscal full year 2024, UiPath expects: Revenue in the range of $1.253 billion to $1.258 billion ARR in the range of $1.425 billion to $1.430 billion as of January 31, 2024 Non-GAAP operating income of approximately $120 million

  • Barclays analyst Raimo Lenschow raises the price target to $17 and maintains an Equal-Weight rating.
  • Needham analyst Scott Berg maintains a $20 price target and reiterates with a Buy rating.
  • Morgan Stanley analyst Keith Weiss raises the price target to $16 and maintains an Equal-Weight rating.
  • RBC Capital analyst Matthew Hedberg raises the price target to $17 and maintains a Sector Perform rating.
  • JP Morgan analyst Mark Murphy raises the price target for UiPath to $18 and maintains a Neutral rating.
  • Wells Fargo analyst Michael Turrin raises the price target to $20 and maintains an Overweight rating.

Ark goes deeper into Block

Cathie Wood’s ARK Investment Management has increased its position in Block by purchasing around 104,500 shares through its ARK Innovation ETF (ARKK), over 17,100 shares through its ARK Next Generation Internet ETF (ARKW).

In addition to ARK’s investments, Block has received positive attention from Wall Street analysts. Dan Dolev at Mizuho Securities upgraded the stock to Buy from Neutral and increased the price target to $93 from $80. Mizuho analysts expressed appreciation for Block’s commitment to cost-containment and see a 30% potential upside to the company’s 2023 earnings guidance. Another highlight mentioned was Block’s unique positioning to create a one-stop-shop network by connecting point-of-sale, Cash App, and BNPL ecosystems.

Signet Jewelers

Owner of Zales and Jared jewelry chains, reported better-than-expected earnings and revenue for Q4 despite facing industry challenges. The stock rose more than 2% in premarket trading due to a promising outlook for the year ahead. Signet expects full-year sales to be flat or slightly down, which is considered robust as the company anticipates a continued shift in consumer spending away from jewelry.

For the quarter ended Jan. 28, the company reported sales of $2.66 billion, a 5% drop year-over-year, but still beating analysts’ estimates of $2.65 billion. Same-store sales declined 9.1%. Factors impacting sales included bad weather in the U.S. during the holiday season, labor strikes, and a weaker British pound in the U.K.

Signet’s guidance for fiscal 2024 Q1 and full year came in slightly below expectations but has still buoyed investors. The company expects revenue in the U.S. jewelry industry to fall by a mid-single-digit percentage in the full year but believes it can gain market share against that performance. Signet’s full-year adjusted earnings per share guidance of $11.07 to $11.59 is slightly below estimates of $11.42.

  • Telsey Advisory Group analyst Dana Telsey has reiterated Signet Jewelers with a Market Perform rating and maintained a $75 price target.

AMZN

  • JMP Securities analyst Nicholas Jones has reiterated a Market Outperform rating on Amazon.com and maintained a $140 price target.