Upwork (UPWK), Sprout Social (SPT) & Halozyme (HALO) Report. Fisker (FSR) Announces Major Collaboration
Upwork (UPWK) reported Q4 results yesterday that surpassed expectations on the top and bottom lines. Revenue was up 32% to $106.2 million (beating by $8.8 million) while adjusted EPS of $0.06 beat by $0.06. Guidance for 2021 also surpassed consensus. Management sees 2021 revenue of $460 million to $470 million (up 23% to 26%), nicely ahead of estimates for $440 million (up 22%). The stock was hammered yesterday morning but bounced back during the session to close up a fraction and then this morning it shot briefly to an intra-day all-time high. There is a lot to like about the quarter and big picture I think Upwork can still run higher. In the near term we may see shares bounce around as it is a “pandemic play” and many of these stocks are losing momentum as more investors turn to more cyclical bets. Continue to hold and let’s see how the stock behaves in the coming days. HOLD
Sprout Social (SPT) reported Q4 results yesterday that also surpassed expectations. Revenue was up 32.6% to $37.3 million (beating by $1.4 million) while adjusted EPS of -$0.06 beat by $0.05. Guidance for 2021 looks solid with management calling for 2021 revenue of $172.5 million (up 30%), modestly ahead of estimates for $170 million. The company is landing a lot of new clients (up 1,162 in Q4, roughly equal to all of 2019), bigger clients (359 landed with accounts worth over $10K), billings are accelerating (up 39% in Q4 2020 versus up 25% in Q3 2020), and newer modules (Listening and Analytics) continue to be purchased. Altogether it was a really good quarter, exactly what the stock needed after racing above 80 last week. After a significant pullback this week SPT is bouncing today (up roughly 10%). We’ll stick with the hold rating for now and let the market work through its interest-rate induced indigestion with an eye toward moving to buy if/as things settle down. HOLD
Halozyme Therapeutics (HALO) reported Q4 results yesterday that slightly beat on the top line and missed on the bottom line. Management also announced an offering of convertible notes, with proceeds to be used to buy back stock ($125 million worth), pay down some existing convertible notes and for other purposes. Revenue in the quarter was up 127% to $121.7 million, beating by $950K. GAAP EPS of $0.50 missed by $0.05. Management issued guidance for 2021 that included 40% to 48% revenue growth (to $375 million to $395 million), roughly in line with consensus, and EPS growth of 54% to 70% (to $1.40 to $1.55), which is a little light but could easily be boosted by the aforementioned share repurchase effort. On a product level the takeaway message from the quarter is that Faspro and Phesgo are set to carry growth for coming years as royalties from expanding approvals will more than offset declines from legacy products. As a refresher, remember that Halozyme has developed a proprietary enzyme used to facilitate the delivery of injected drugs and fluids. FASPRO is marketed by Janssen (part of J&J) while Phesgo is marketed by Roche. HALO had pulled back to its 50-day line yesterday but has surged over 15% to new all-time highs today. This feels especially good and suggests the stock’s pattern of rallying, consolidating, rallying, consolidating could continue. We’ll keep at buy with the caveat that it’s best to take new buying slow in the current environment. BUY
Fisker (FSR) didn’t report earnings but it did announce a collaboration with Foxconn which sounds like it means high-volume electric vehicle production and potential distribution for both the U.S. and Asia. This is significant. Foxconn has developed its M1H open EV platform which is a modular, scalable and customizable platform with lightweight chassis, unibody design, stable electrical/electrical architecture (EEA) and autonomous driving capability. This would be a second platform, with the Magna platform being for the first car (the Ocean) and would help Fisker get to its goal of four car models by 2025. One might assume these cars would be higher production and hit a lower price point (maybe around $35,000) than the Ocean (ranging from $40,000 to $80,000). Proposed timeline includes car launch by end of 2023 with 250,000 units, much more and much earlier than previous assumptions (without a manufacturing partner identified); and that Fisker could have a second platform launched around 2026 and just over 100,000 units by 2030. To reiterate, this is a speculative stock but the founder has failed before and is back at it, older, wiser and in a time when EVs are all the rage, not a distracting side story. Very interesting stuff. Keeping at buy a half. BUY A HALF