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Thursday, August 18, 2022
YOU'RE INVITED: AIM 2.0 Launch and Dr. David Krause’s Retirement Celebration
Tuesday, May 10, 2022
An International Equity holding: JAZZ Pharmaceuticals PLC. (JAZZ, $156.62): “Listen to the Music!” By: Danny Scelza, AIM Student at Marquette University
JAZZ
Pharmaceuticals PLC. (JAZZ, $156.62): “Listen to the Music!”
By: Danny
Scelza, AIM Student at Marquette University
Disclosure:
The AIM International Equity Fund currently holds this position. This article
was written by myself, and it expresses my own opinions. I am not receiving
compensation for it and I have no business relationship with any company whose
stock is mentioned in this article.
Summary:
• Jazz Pharmaceuticals. (NASDAQ: JAZZ) is a global pharmaceutical
company that focuses on the identification, development, and commercialization
of pharmaceutical products. Their products are centered around medicines for
both adults and adolescents in the areas of neuroscience, oncology, and other.
JAZZ has developed staple brands like Xyrem and Xywav, as well as newly
approved drugs and therapies along with an extensive pipeline of 17 drugs and
therapies in clinical trial phases.
• In Quarter 1 of 2022, JAZZ
reported an EPS of $3.73, lower than the consensus EPS of $3.84 for the
quarter. EPS is up 7% YTD from Q1 2021.
• JAZZ’s vision 2025 plan to
reach a net leverage ratio of 3.5x by the end of 2022, a main point of focus in
JAZZ’s pitch in February, is on pace to meet the goal. Since the close of the
large GW acquisition in Q2 2021, JAZZ has consistently lowered net leverage
quarter-to-quarter and currently have a net-leverage ratio of 3.9x.
Key
points: JAZZ’s recent earnings call showed the company slightly missed
adjusted EPS by $0.11, but the company raised revenue guidance for fiscal year
2022 from $3.5 billion to $3.7. Focusing on Epidiolex, the adopted drug from
the GW acquisition with massive potential, product sales YTD are up 6.7% and
accomplished $18 million inventory build in 2021 Q4, majority reserved for this
past quarter. Commercialization of Epidiolex in European markets continues on
pace with the drug fully available in 4 of 5 key European markets with an
expected launch in France by the end of this year.
Recently launched and near-term R&D pipeline opportunities remain promising with the addition of two new early-stage molecules. Programs emerging from the cannabidiol platform are on track to begin additional phase 3 trial for Epidiolex in epilepsy later this quarter, which could bolster this drugs outlook. Ongoing compelling Xywav clinical trials to address idiopathic hypersomnia remain strong following the first full quarter of treatment options for IH that don’t just address symptoms. Active patients taking Xywav for IH has grown 200% over the past quarter.
Earlier this quarter, JAZZ acquired global development and commercialization rights to Werewolf Therapeutic’s WTX-613, worth up to $1.2 billion. "We believe WTX-613 has the potential to minimize the toxicity associated with systemic IFNα therapy, preferentially delivering IFNα to tumors, and thereby expanding its clinical utility in treating cancer," said Rob Iannone, executive vice president, global head of R&D of Jazz Pharmaceuticals. JAZZ made an upfront payment of $15 million, and Werewolf is eligible to receive a tiered, mid-single-digit percentage royalty on net sales of WTX-613.
What
has the stock done lately?
After
beating EPS estimates of $3.64 by producing a 2021 Q4 EPS of $4.21, JAZZ’s
stock price rose 12% and continued to trend positively reaching a six-month
high of $168.66. After their recent missed earnings, the stock dropped 4.7%. Focusing
on organic growth and taking a back seat on more major investments following
the GW acquisition, the company has seen their new top line drivers gain
traction as they lower their net leverage ratio, making recent stock price drop
nothing catastrophic to its long-term outlook.
Past
Year Performance: In the last year, JAZZ is down 11.68%, with a
high $181.17 and a low price of $122.41. The iShares MSCI ACWI is down 8.28%
over that same time. The low-price period was due to the expected aftermath of
the GW acquisition which caused JAZZ unprofitability for quarter’s 2 3 and 4 of
2021.
My
Takeaway
Following the recent earnings
report, the stock price declined due to missed EPS guidance, but revenue outlook
for the year increased by $200 million. When AIM international fund acquired
JAZZ, their expanding drug portfolio and robust pipeline was essential to
driving top line growth and overall company growth. Financial goals and
continued guidance remain consistent with initial outlook presented, making the
long-term outlook on JAZZ strong. As top line growth and drug specific market
penetration continues, JAZZ is a strong recommended HOLD.
A Small-Cap Equity holding: Casey’s General Stores (CASY, $201.30): “Pizza and Gas, an Unlikely Combination” By: Max Tiemann, AIM Student at Marquette University
Casey’s
General Stores (CASY, $201.30): “Pizza and Gas, an
Unlikely Combination”
By: Max
Tiemann, AIM Student at Marquette University
Disclosure:
The AIM Small-Cap Equity Fund currently holds this position. This article was
written by myself, and it expresses my own opinions. I am not receiving
compensation for it, and I have no business relationship with any company whose
stock is mentioned in this article.
Summary
- Casey’s
General Stores Inc. (NASDAQ: CASY) operates gas stations and
convenience stores across the US Midwest region. The company operates
through a fuel segment (55% of revenue), a grocery and other merchandise
segment (31%), a prepared food and fountain segment (13%), and an other
segment (1%).
- The
Covid-19 pandemic forced the company lose revenue as less people were on
the roads which decreased fuel sales and foot traffic.
- To
combat the pandemic, management has been extremely focused on their growth
strategy to earn 8-10% EBITDA growth year over year.
- Growth strategies include acquiring more stores, a digital app, Casey’s branded products, and partnerships with UberEats and DoorDash
Key
points: Ever since Darren Rebelez took over
as CEO, Casey’s has aimed to have 8-10% EBITDA growth year over year. This
growth is needed due to the revenue lost from the Covid-19 pandemic. To achieve
this high growth the company has implemented a variety of strategy to
ultimately increase earnings for shareholders.
The first
growth strategy that Casey’s has implemented is store growth and acquisitions.
Since 2010, the company has increased stores by a 4.37% CAGR and currently
operates over 2,458 stores. Casey’s increases their stores by either new store
builds or through acquisitions. This past year the company acquired 178 stores
from other gas stations.
The
next growth strategy that Casey’s has implemented is partnering with UberEats
and DoorDash. This partnership allows the company to earn revenue from digital
orders and ultimately target a different customer base.
Another
growth strategy that Casey’s has implemented is introducing a digital app and
their own brand. With over 4.2 million people on the Casey’s app, the company has
been able to earn revenue from digital sales of grocery and prepared foods. On
top of that Casey’s introduced their own brand that allows them to increase
their gross margin by having a lower cost of goods sold on their branded foods.
By combining
all these strategies, Casey’s aims to earn 8-10% EBITDA growth over the coming
years.
What
has the stock done lately?
Over
the past six months, CASY is up 4.39%. This increase can be attributed to management’s
growth strategy of acquisitions and adding more stores to increase earnings. Over
the past month, CASY is up 0.61% but over the past five days the stock is down
4.52%. This displays that recently CASY has had success and their returns may
be skewed from a difficult week.
Past
Year Performance: Over the past year, CASY is down 9.74%. However,
this decrease primarily came in the beginning of the year. Over the past six
months CASY is up 4.39%, displaying that management’s growth strategy has been
effective in increasing earnings and the share price.
My
Takeaway
I believe that Casey’s General
Stores growth strategy will prove to be successful. By combining the strategies
of unit growth, digital sales, and their own brand, I think the company will be
able to grow their EBITDA and ultimately increase EPS. On top of that, I think
the Covid-19 pandemic forced Casey’s to miss out on a ton of foot traffic which
ultimately decreased revenue and their share price. As the world finally
returns to normalcy, I believe the stock price should continue to increase.
An International Equity holding: STMicroelectronics NV ADR RegS (STM, $37.64): “ST(MEMS)” By: Kevin Igoe, AIM Student at Marquette University
STMicroelectronics NV ADR RegS (STM, $37.64): “ST(MEMS)”
By: Kevin
Igoe, AIM Student at Marquette University
Disclosure:
The AIM International Equity Fund currently holds this position. This article
was written by myself, and it expresses my own opinions. I am not receiving
compensation for it, and I have no business relationship with any company whose
stock is mentioned in this article.
Summary
- STMicroelectronics NV ADR
RegS (NYSE: STM) designs, develops, manufactures, and markets
products, which offers discrete and standard commodity components,
application-specific integrated circuits, full custom devices and
semi-custom devices for analog, digital and mixed-signal applications.
- STM has
seen a variety of wins in their automotive segment through new
microcontrollers and power modules.
- STM
intends to target industry leaders within the industrial industry with
leading-edge products adapted to their needs.
- STM
is currently on track with their 2022 plans in revenues and CAPEX investments
to sustain short- and long-term growth.
Key
points: STM through Q1 2022 has earned designed wins with
their power modules and module maker using Gen3 SiC MOSFET technology EV Traction
Inverter applications. What this
technology does is help eliminate tail current during switching which results
in faster operation, reduced switching loss, and increased stabilization. Along with this effective use of new
technology STM has also designed their next-generation stellar automotive MCU
into a new zonal architecture for software-defined vehicles.
In STM’s latest earnings presentation
they explained for their industrial segment they ranked number one worldwide in
general purpose microcontrollers for 2021.
While also introducing their first intelligent sensor processing unit
with Gen3 MEMS. MEMS is a process
technology used to create tiny integrated devices or systems that combine mechanical
and electrical components helping their products become more efficient and in
return attractive to customers. Finally, STM has grown their sockets in various
industrial applications helping them target the growing markets of renewable
energy and power saving technologies.
STM has planned to invest about
$3.4 to $3.6 billion in CAPEX to increase the production capacity and strategic
initiatives. The first of their investments
being in their new industrialization line located in Italy. Based on the strong demand from customers and
planned future investments STM has a goal of revenues for 2022 to be in the
range from $14 billion to $15 billion.
This target goal would mean a growth of about 17%. After quarter one 2022 they have done $3.55
billion in revenue currently being on track with their projected growth for the
current year.
What
has the stock done lately?
In the past week STM has seen an
increase of 3.32% after releasing earnings for quarter one fiscal year 2022 on
April 27th. The company
reported EPS of $0.79 and revenue of $3.55 billion beating estimates in both
categories. This could be the momentum
boost the companies needed after decreasing 11.79% in the past month.
Past
Year Performance:
STM year to date has decreased 25.02%. This has been closely related to the current semiconductor shortage that has been going on for the last year and a half. The reduction in car sales has also impacted STM’s automotive segment operations.
My
Takeaway
I believe STM is well suited for
the future with the semiconductor industry taking a large impact from
implications relating to the Covid-19 pandemic.
Research has shown that the global semiconductor should grow about 10% through
the end of 2022 proving there is growth opportunities for STM to potentially
capitalize on. With their impressive revenue
in quarter one staying on track with management’s plan to reach about $14
billion in total revenue for 2022 and advancements being made in the automotive
and industrial industries I believe STM has tremendous opportunities for
growth.
A Small Cap Equity holding: National Vision Holdings, Inc. (EYE, $38.97) By: Grace McCrea, AIM Student at Marquette University
National Vision Holdings, Inc. (EYE, $38.97)
By:
Grace McCrea, AIM Student at Marquette University
Disclosure: The AIM
Small-Cap Equity Fund currently holds this position. This
article was written by myself, and it expresses my own opinions. I am not
receiving compensation for it, and I have no business relationship with any
company whose stock is mentioned in this article.
Summary
● National
Vision Holdings, Inc. (NYSE: EYE) specializes in the
sale of optical products, specifically eye care and eyewear. The majority (91%)
of revenue is generated from the Owned & Host segment, which contains sales
from the eyeglass companies that EYE works with. The remaining revenue comes
from the Legacy segment, which processes
inventory and lab services.
● Just a few weeks ago, on April 11,
2022, EYE added Joe VanDette to their company as Chief Marketing Officer. He
has previous experience at Smart & Final (grocery), as well as at Toys ‘R
Us (clothing and toy retailer) in positions involving marketing, analytics, and
strategy.
● In an investor presentation released in
March 2022, EYE emphasized that their store count has been increasing at a CAGR
of 7% for 16 years. Although their new store success rate is a very impressive
97%, a comment about their commitment to e-commerce would have been beneficial.
In order to accommodate younger generations who prefer online shopping, it will
be necessary for EYE to focus on improving their experiential platform in the
digital space.
Key Points: Although
EYE has been committed to Corporate Social Responsibility (CSR) for over 30
years, they began a special dedication to CSR in 2021, which started with an
Impact Report. In order to evaluate their historical commitment to CSR, EYE
organized a strategic assessment and a sustainability assessment.
To
begin these assessments, EYE identified their most prevalent environmental
impact locations throughout the business. This helped clarify focus areas of
CSR that need improvement at National Vision Holdings. Finally, management
created a governance structure, lived out in the Board of Directors, to
prioritize CSR initiatives.
In
addition to this commitment towards CSR, EYE has an advantage in the market as
a whole, which is important for their future success. According to management,
EYE currently has 965 locations throughout the country, which only represents
about 31% of the total available market. The other 69% of the market represents
extreme growth potential for National Vision Holdings, Inc.
What has the stock
done lately?
The
overall markets saw a rough start to 2022, and recent macroeconomic issues like
the conflict between Russia and Ukraine have not helped. However, in their
Q4FY21 earnings call on Feb 28, 2022, EYE reported a 4.46% increase in revenue,
signifying that they beat earnings. This is significant for many reasons, but
primarily because it marks the first year that EYE brought in net revenues
greater than $2 billion. Even with this positive news, EYE has reported a YTD
return of -21.57%. This is likely due the company’s struggle to report
pre-pandemic same store sales growth.
Past Year Performance: EYE’s
performance over the past year has been quite volatile, resulting in a 52-week
return of -26.47%. As shown below, as of April 28, 2022, the stock is rather
cheap and trading near its 52-week low of $34.70.
My Takeaway
EYE’s
dedication to CSR is impressive. Commitment to corporate social responsibility
and/or environmental social governance is currently a majority of investor's
priority and preference. It’s really important to know what investors, as well
as customers, want. With this in mind, I would like to see a stronger
commitment to their customers through e-commerce. With one of their closest
competitors being Warby Parker, who is known for offering an exceptional online
experience for “trying on” glasses, EYE must commit to the younger generations
who prefer to shop this way.
An International Equity holding: Eaton Corp. Plc (ETN, $145.71): “The (electrical) Power of Eaton” By: Zach Turbett, AIM Student at Marquette University
Eaton
Corp. Plc (ETN, $145.71): “The (electrical) Power of Eaton”
By: Zach
Turbett, AIM Student at Marquette University
Disclosure:
The AIM International Equity Fund currently holds this position. This article
was written by myself, and it expresses my own opinions. I am not receiving
compensation for it, and I have no business relationship with any company whose
stock is mentioned in this article.
Summary
- Eaton Corp. Plc (NYSE:ETN) provides
energy-efficient solutions for electrical, hydraulic, and mechanical
power. The company operates in four different segments: Electrical
Americas and Electrical Global, Aerospace, Vehicle, and eMobility. Eaton
operates internationally with the majority of sales based in the United
States.
- With
the sale of Eaton’s hydraulic business, it has allowed the company to
continue to heighten and expand in their current segments.
- In
Q1 of 2022, Eaton acquired Royal Power Solutions for $600 million. Royal
Power Solutions is a manufacturer of electrical connectivity components
used in electric vehicle, energy management, industrial and mobility
markets.
- The
company announced the addition of two key executives which will go into effect
July 5th, 2022. Heath Monesmitch will be named President and
Chief Operating Officer of the Electrical Sector where he will be
responsible for the EMEA region. Additionally, Paulo Ruiz will be the
President and Chief Operating Officer of the Industrial Sector. Both
additions will add great value to the company in the future.
- Eaton
has experienced substantial financial growth in a challenging environment
in Fiscal 2021 in relation to the Covid-19 pandemic, inflation, and supply
chain constraints.
Key
points: Late last year, Eaton completed the
sale of its hydraulic business to Danfoss (a danish industrial company) for
$3.3 billion. The hydraulic business was seen as a large but
slower-growth, lower margin business than the rest of the company. With the
sale of the hydraulic business, it marks as another milestone for the company’s
transformation into a higher growth company. Additionally, this sale will
provide great value for its shareholders as it earns higher returns.
Eaton completed a very recent
acquisition of Royal Power Solutions which will synergize well with its already
existing electrical segment. With Eaton’s continued commitment to improve
quality of life through power management technologies, this will allow the
company to excel. Also, this acquisition will give them the ability to
capitalize on their fast-growing eMobility, Aerospace, and electrical
businesses.
In the past year, the world has
experienced major setbacks due to the pandemic, supply chain constraints, and
rising inflation. Throughout this period, ETN has continued to show financial
strength. For FY 21’, sales were up $19.6 billion dollars, representing 10%
organic growth. In fact, all segment margins were up 18.9% which was an all-time
record for the company. Additionally, the company continued to reinvest in the
already growing company with $575 million going towards Capex and $616 million
towards R&D activities. Lastly, Eaton returned $1.2 billion to their
investors through dividends, and through this same period, their share price
grew 44%.
What
has the stock done lately?
As of late, the stock has seen
increased volatility since the beginning of this year. At the beginning of this
year, ETN’s share price was $170.56, and today it sits at $145.71, representing
a decrease of 14.5%. This decline in price is partly due to the current
geo-political tension between Russia and Ukraine, and ongoing supply chain
constraints.
Past
Year Performance:
ETN’s 52-week range stretches from $139.12-175.72, with its
low trailing back to mid-June of last year. Today, the share price is hovering
very close to its price of that a year ago. In August of 2021, ETN saw a slight
dip from $168.84 to $148.39 due to the CEO’s press conferencing speaking on the
supply chain issues. He explained that the company will have challenges when
respect to their revenue. However, the share price quickly bounced back in the
following months hitting its all-time high. The company will be releasing its
Q1 2022 earnings on May 3rd.
1 Year Stock Chart vs. Benchmark from FactSet here
My
Takeaway
ETN was added to the portfolio at
the end of 2018 and has seen extraordinary growth since then. Although the
company has seen many macro-economic challenges, ETN has stayed strong and has
continued to push forward. Also the company has continued to be a pioneer in
power solutions with its high M&A activity, key customer wins, and many
development programs. Moreover, ETN is joined Bill Gates’ Breakthrough Energy
Ventures and the UK-based Business Growth Fund in providing venture capital
support to Reactive Technologies. The company still faces headwinds with the
ongoing supply chain crisis in which they will need to effectively manage. With
the company’s strong performance prior to the war between Russia and Ukraine,
there is no doubt that Eaton will be a strong performer in the industry and
compared to its peers.
1 Month Stock Chart from FactSet here
