Shutterstock (SSTK) and Repligen (RGEN) Report – Both Remain At HOLD
Shutterstock (SSTK) surpassed EPS expectations and missed by a slim margin on revenue. Revenue was up 8.6% to $199 million (missed by about $3 million) while GAAP EPS of $0.71 beat by around $0.07. The revenue miss is attributed to foreign exchange involving Russia/Ukraine (Shutterstock donated $1 million to Ukraine). Importantly, management says the business is doing very well and maintained full-year 2022 revenue and EBITDA guidance at $835 - $850 million / $210 - $217 million, respectively. It seems that management started the year with conservative guidance and upside remains, especially with respect to expanding profit margins (driven by cost reductions). On the call management talked about all the work they are doing with new content subscriptions, workflow tools, etc. Big picture, they sound bullish and confident. The stock yields almost 1.3% and the company should continue to buy back shares. It’s a name that “should” work in this environment, especially given the price is below 80 after the recent market pullback. All the same, we’ll keep at hold for now until we have more evidence that the stock (and market) is firming up. HOLD
Repligen (RGEN) reported this morning with both revenue and EPS surpassing expectations. Revenue was up 45% to $206.4 million, beating by almost $21 million, while EPS was up 35% to $0.92, beating by $0.20. Gross margin was up 1.9% to 60.1%. Despite the beat, management reduced full-year 2022 revenue guidance by around 4%, citing slower-than-expected COVID-related business. This isn’t a huge surprise. The twist is that the underlying business is cranking, and given that it is less susceptible to wavering COVID demand is arguably the more important piece of the pie. On that note management says the base business is seen growing 24% - 31% this year, up from previous guidance of 20% - 22%. Adjusted EPS is now seen roughly $0.14 lower, in a range of $3.07 - $3.15.
On the conference call there was some talk about the potential for COVID-related business to slow even more than expected. Management said they think they’re being appropriately conservative and pointed (again) to the underlying demand in the core business. This feels like the environment to put out expectations that can EASILY be surpassed (we will see).
RGEN stock was up nearly 20% this morning but the gain has since moderated to around +10%. This is a tough one. Shares are beaten up but “should” (again with that term) firm up. The COVID premium has come out of the stock and we see peers TMO and DHR trading near support after big pullbacks lately. Long term RGEN should be a winner, it’s just a matter of where the stock settles before it can start to work again. With the conference call being held this morning (I listened) the analysts that follow RGEN have yet to publish their analysis. I’m keeping at hold for now and will review their notes once available. HOLD