Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<p>Despite our concerns regarding the growing performance disparity between the haves (e.g., Technology, FAANG, mega-caps, growth) and the have nots (e.g., Materials, Energy, small-caps, value), the silver lining continues to be that the latter group is not breaking down on an absolute (price) basis. Due to this fact along with several observations highlighted below, we remain bullish. Continue to buy the dips. In today’s report we highlight attractive Groups and stocks within Health Care and Technology: Hospitals, Pet Health, Software, Enterprise Applications, Large-Cap, and Software, Enterprise Applications, Small-Cap.</p>

Despite our concerns regarding the growing performance disparity between the haves (e.g., Technology, FAANG, mega-caps, growth) and the have nots (e.g., Materials, Energy, small-caps, value), the silver lining continues to be that the latter group is not breaking down on an absolute (price) basis. Due to this fact along with several observations highlighted below, we remain bullish. Continue to buy the dips. In today’s report we highlight attractive Groups and stocks within Health Care and Technology: Hospitals, Pet Health, Software, Enterprise Applications, Large-Cap, and Software, Enterprise Applications, Small-Cap.

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

Qualtrics International / Equity Capital Markets

<ul>
<li>Our base case EV for Qualtrics is US$5.2 billion. This is derived from our estimated sales of US$401.4 million in 2018 using an EV/Sales multiple of 12.9x, which is 30% premium to the average EV/Sales multiple of its peers. Our base case implied market cap for the company is US$5.7 billion adjusting for net cash. Our base case implied IPO price is US$26.50, which is 26% higher than the high end of the IPO price range of US$21. Therefore, we are positive on the Qualtrics IPO and we believe it provides an attractive upside. </li>
<li>We forecast Qualtrics to generate sales of US$401.4 million in 2018 (up 38.5% YoY) and US$541.8 million in 2019 (up 35% YoY). We expect the company's strong sales growth to be led by its subscription services. In 2018, we estimate that the subscription services represent 74.3% of total sales, followed by research on demand (17.5%), and professional services &amp; others (8.3%). </li>
<li>Qualtrics is expected to start trading next week in the US. Similar to other recent IT stocks in the US such as <a href="https://www.smartkarma.com/entities/27427" target="_blank" data-smartkarma-citation="entities:27427:1">Eventbrite Inc (EB US)</a>, <a href="https://www.smartkarma.com/entities/27526" target="_blank" data-smartkarma-citation="entities:27526:1">Elastic NV (ESTC US)</a>, and <a href="https://www.smartkarma.com/entities/27465" target="_blank" data-smartkarma-citation="entities:27465:1">Upwork (UPWK US)</a>, we expect a nice pop to Qualtrics' share price in the first day of trading.</li>
</ul>


Our base case EV for Qualtrics is US$5.2 billion. This is derived from our estimated sales of US$401.4 million in 2018 using an EV/Sales multiple of 12.9x, which is 30% premium to the average EV/Sales multiple of its peers. Our base case implied market cap for the company is US$5.7 billion adjusting for net cash. Our base case implied IPO price is US$26.50, which is 26% higher than the high end of the IPO price range of US$21. Therefore, we are positive on the Qualtrics IPO and we believe it provides an attractive upside. 
We forecast Qualtrics to generate sales of US$401.4 million in 2018 (up 38.5% YoY) and US$541.8 million in 2019 (up 35% YoY). We expect the company's strong sales growth to be led by its subscription services. In 2018, we estimate that the subscription services represent 74.3% of total sales, followed by research on demand (17.5%), and professional services &amp; others (8.3%). 
Qualtrics is expected to start trading next week in the US. Similar to other recent IT stocks in the US such as Eventbrite Inc (EB US), Elastic NV (ESTC US), and Upwork (UPWK US), we expect a nice pop to Qualtrics' share price in the first day of trading.


Qualtrics IPO Preview: Valuation Analysis

United States

Avalara, Inc. provides sales tax management solutions. The Company offers a web-based solution to manage sales tax processes by integrating accounting and business applications that span all platforms, as well as consulting, training courses, and technical support services. Avalara serves customers worldwide.

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Avalara (AVLR US)

U.S. Equity Strategy: Buy The Dips

Despite our concerns regarding the growing performance disparity between the haves (e.g., Technology, FAANG, mega-caps, growth) and the have nots...

Vermilion Research

Qualtrics IPO Preview: Valuation Analysis

Our base case EV for Qualtrics is US$5.2 billion. This is derived from our estimated sales of US$401.4 million in 2018 using an EV/Sales multiple...

Douglas Kim

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