The reports are in. Sprout Social (SPT), Inspire (INSP), Arena Pharmaceuticals (ARNA), Goosehead Insurance (GSHD), Repligen (RGEN)
Sprout Social (SPT) reported Q4 results yesterday that 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
Inspire Medical Systems (INSP) reported Q4 results yesterday that beat on both the top and bottom line. Revenue was up 71% to $46 million, beating by $4.3 million, while GAAP EPS of -$0.28 beat by $0.18. Management gave 2021 revenue growth guidance of 59% to 63%, to $183 million to $188 million, which is well ahead of consensus estimates for revenue of $170 million and in all likelihood is quite conservative. Almost all the trends are good. Inspire added 55 new centers in the quarter (analysts had estimated around 30), continues to break the country into sales territories, and had expanded coverage to cover 220 million lives. Looking into 2021 management expects to keep adding 34 to 38 centers per quarter. The bottom line is demand for obstructive sleep apnea treatments that don’t involve putting a mask over one’s face (CPAP machine) is understandably high and Inspire therapy works. Keep holding and be on the lookout for dips on which to add shares. HOLD
Arena Pharmaceuticals (ARNA) reported Q4 results yesterday and as is the norm here it’s more about trials and pipeline than revenue. Not much has changed over the last couple of months and management remains focused on the release of Phase 2 data for CAPTIVATE (olorinab in IBS, should be out by end of March, expectations are low as IBS is tough to treat) and partial data for the Phase 2/3 CULTIVATE trial (etrasimod in Crohn’s) by the end of the year. We could also see data from a Phase 2 study for etrasimod in alopecia areata (AA) by end of 2021. Still, the main event here is the Phase 3 ELEVATE trial (etrasimod in ulcerative colitis) which comes out in roughly one year. Keeping at buy. BUY
Goosehead Insurance (GSHD) reported Q4 results yesterday that beat on the top and bottom lines. Revenue of $34.7 million was up 48.5%, beating by $3.6 million, while adjusted EPS of $0.19 beat by $0.01. Full year 2020 revenue was up 51% to $117 million. Management also issued guidance for 2021 that includes revenue of $144 million to $155 million, up 23% to 32%, which is a little light of consensus expectations of $160 million (up 37%). I suspect management is being conservative and would note that they raised guidance twice in 2020, then beat the high end. Management said some of the strength in Q4 was due to contingent commissions, which may not be as strong in 2021 and that accounts for some of the conservatism around revenue guidance. Shares hit an all-time high of 174.8 last week after breaking out above 150, which is roughly where the stock is trading today after falling 10%. I suspect there is some disappointment around revenue guidance and that there is marginally less excitement to buy the stock today than there was yesterday. That’s likely to keep a lid on GSHD’s upside potential in the near term. I like the story and the stock and think long term it’s still good, we just may see GSHD bounce around for a little while. We are up roughly 380%. Let’s take a little off the table by selling a quarter, which will leave us with a half position. SELL A QUARTER
Repligen (RGEN) reported Q4 results this morning that beat across the board. Revenue was up a huge 56.4% to $108.6 million (beating by $14.7 million) while adjusted EPS of $0.52 beat by $0.21. Those are big numbers for Repligen and 2021 looks good too. Management gave guidance for revenue growth of 37% to 43% ($500 million to $525 million) and adjusted EPS of $1.86 to $1.94 versus consensus of $1.18. Covid-19 related business is helping a lot and accounted for 22% of Q4 revenue. This tailwind should persist well into 2021 too, while non-Covid-19 business should continue at a normalish growth rate of around 20%. Upside to guidance could come from new product launches and M&A. I believe management will continue to execute well and the only reason the stock isn’t up HUGE today is because investors know that the boost from Covid-19 is somewhat temporary. Still, Repligen is the last of the pure-play bioprocessing companies of its size and has leading technology that should help sustain 20% or more revenue growth for years. You can still buy. BUY