UPDATE: BofA Securities Upgrades Tuya Inc (TUYA) to Buy

May 14, 2021 7:21 AM EDT
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Price: $2.42 +7.56%

Rating Summary:
    1 Buy, 1 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 10 | Down: 13 | New: 20
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(Updated - May 14, 2021 7:21 AM EDT)

BofA Securities analyst Emerson Chan upgraded Tuya Inc (NYSE: TUYA) from Neutral to Buy with a price target of $22.00 (from $25.00).

The analyst comments "Tuya reported solid 1Q results. Total revenue of US$56.9mn (+200% YoY) above our forecast of US$50.2mn, and 2Q guidance of US$78-81mn (101-109% YoY) beat our US$67mn. IoT PaaS revenue of US$49.8bn (+227% YoY) aided by 210% LTM DBNER and 600 customer adds due to (1) robust demand from OEM/brands; and (2) relatively low base in 1Q20 due to COVID lockdown (87% revenue CAGR in 1Q19-21). IoT PaaS deployment reached 39.2mn (+292% YoY). SaaS and others revenue of US$2.3mn (+224% YoY) on new logo adds. 1Q results validate our view that Tuya is setup for beat-and-raise. Revenue from lighting & electrical/ appliance/ security & sensor product accounted for ~60%/10%/10% of revenue in 1Q. We expect higher mix on non-lighting/electrical in the future. Commentary on chip supply looks positive, as management said it works closely with suppliers to secure chips given its procurement scale, in-line with our checks, and it may be at the expense of its competitors. We see potential hike on chip costs, though Tuya will likely pass it on to customers supported by its market leadership and solid value props of IoT PaaS. GPM of 41.1% exceeded our estimate of 39.5%, as IoT PaaS COR per deployment continues to fall thanks to economies of scale and expansion in higher-margin products. Tuya expects 2Q GPM to be stable QoQ. Longer term, we see further GPM expansion as it has yet to reach operating leverage at scale, with upside driven by chip node migration from 40nm to 22nm, which is on-track to undergo transition in 2022, according to Tuya. EBIT margin of -43%, vs -38%/-24% in 1Q/4Q20 given (1) IPO related expense in G&A; and (2) higher R&D and S&M spend."

For an analyst ratings summary and ratings history on Tuya Inc click here. For more ratings news on Tuya Inc click here.

Shares of Tuya Inc closed at $16.95 yesterday.


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