Stocks Update: Positive Q2 Momentum for Catalyst Pharmaceuticals and Other Company Updates – June 1, 2023

Welcome back to my daily blog post where I share updates on the stocks I own. Today, we’ll be covering significant events in the pharmaceutical, technology, retail, and fashion industries. So without further ado, let’s dive in and see how these events have impacted the stock market!

Catalyst Pharmaceuticals Reaffirms 2023 Revenue Guidance and Forecasts YoY Increase for FIRDAPSE

Catalyst Pharmaceuticals, Inc. (Nasdaq: CPRX) has reiterated its full year 2023 total revenue guidance while also forecasting a year-on-year increase in net product revenue for FIRDAPSE®. The guidance for the year includes the acquisition of FYCOMPA® rights in January 2023. The company has confirmed it is on track to meet its guidance, following exceptional Q1 results in 2023 and sustained momentum leading into Q2.

FIRDAPSE, a drug used to treat Lambert-Eaton Myasthenic Syndrome (LEMS), is expected to deliver net product revenue guidance of between $245 million and $255 million, a year-on-year increase of 17%. In addition, the company has forecast FYCOMPA 2023 net revenue of approximately $130 million for the 11 months. Catalyst has reaffirmed its non-GAAP net income forecast of between $195 million and $205 million for the full year 2023.

As a shareholder in Catalyst Pharmaceuticals, I am pleased to see the company maintain its guidance and continue on a path towards sustainable organic revenue growth. The recent acquisition of FYCOMPA has given Catalyst an edge, leading to improved financial performance and strategic accomplishments. Therefore, I recommend buying the stock. The positive momentum in Q2 2023 suggests that Catalyst will be able to deliver robust results in the coming quarters and reported year-end figures in line with guidance.

DZS to Restate Q1 Financials, Offers Updated Full-Year 2023 Guidance

DZS, a global leader in access, optical, and cloud-controlled software-defined solutions, announces that it will restate its Q1 2023 financial statements, which ended on 31 March 2023. Two customer projects’ revenue recognition timing led to a value of approximately $15 million to be restated, with the majority anticipated to come in Q2 and Q3 of 2023. The customer relationships remain intact, and the customers have begun paying the restated amounts due.

Although Q2 earnings guidance gets withdrawn due to the restatement, DZS remains “encouraged and optimistic” about the rest of 2023 and 2024, considering rigid sales pipelines and Tier I/II trials globally. DZS is updating its full-year guidance, factoring in the risk that customers may take longer to deploy their current inventories. Net revenue is expected to be approximately $370 million, with an adjusted gross margin rate that remains steady in the range of 35%-37%.

As a personal thought, DZS stays a promising investment with a solid business foundation and strong sales pipeline regardless of the restatement. Despite the Q1 revision, the company expects revenue in 2023 to be roughly $370 million. It’s a momentary setback for a company with excellent customer relationships and a robust product portfolio, especially with the encouraged trials of Tier I/II worldwide. Therefore, I recommend buying the DZSI stock, considering the updated and quite stable guidance for the full-year 2023.

Lands’ End, Inc. Q1 Report Shows Growth and Raises Fiscal 2023 Outlook

Lands’ End, Inc. (NASDAQ: LE), the Wisconsin-based clothing, home décor, and retail company, has reported a net revenue growth of 1.9% in the Q1 compared to the same period last year. An adjusted EBITDA increase of $5.7 million, or 41.3%, to $19.5 million was also reported. These earnings were led primarily by the company’s swimming business and vacation adjacencies, contributing to strong margin performances. This resulted in raised expectations for the fiscal 2023 outlook.

CEO Andrew McLean believes his leadership team’s continued strategic initiatives made strong progress this quarter. The hiring of Stuart Hogue as Senior Vice President, US eCommerce, and Jim O’Connor as Senior Vice President and General Manager of Lands’ End Outfitters will enable further refinements and long-term value for shareholders.

In my opinion, the company’s earnings growth and strategic vision demonstrate a positive trend. Therefore, I recommend buying the stock.

Duluth Trading Company Posts Strong Financial Results for Q1 2023

Duluth Trading Company, a lifestyle brand of men’s and women’s workwear, casual wear, outdoor apparel, and accessories, has announced its financial results for the first quarter of 2023. The company reported a net sales increase of 0.7% to $123.8 million compared to the prior year’s first quarter. This growth was fueled by the AKHG sub-brand, which saw a 42.5% increase in net sales compared to the prior period’s first quarter, and the women’s business, which had net sales growth of 14.4% over the prior year’s first quarter. Duluth Trading also reported adjusted EBITDA of $5.3 million and a strong financial position with $210 million of liquidity.

As a shareholder of Duluth Trading, I am encouraged by the company’s strong financial results and the continued growth of its AKHG sub-brand and women’s business. The fact that inventories are well managed and down compared to prior periods is also a positive sign. Furthermore, the company’s strategic investment in a new automated fulfillment center in Adairsville, GA is set to go live in the third quarter, which is a promising development. Therefore, I recommend holding onto the stock.

Victoria’s Secret & Co. Reports Q1 2023 Financial Results: Sales Challenged In North America But International Growth Continues

Victoria’s Secret, a leading retailer specializing in lingerie, announced its Q1 2023 financial results. The first quarter ended on April 29, 2023, with sales in-line with the company’s original expectations. However, Victoria’s Secret reported that sales were more promotional than planned, and it ended the quarter at the lower-end of its adjusted operating income guidance. Sales performance was particularly challenging in core categories where there was a significant decline in the overall stores and digital intimates market in North America. This challenge also led to a low-double-digit decline in inventory levels in Victoria’s Secret and PINK business, compared to last year.

Despite the challenging market in North America, Martin Waters, the company’s CEO, noted that Victoria’s Secret is expanding internationally, with China being a bright spot. Furthermore, the recent acquisition of Adore Me met expectations during its first quarter as a part of Victoria’s Secret & Co. The CEO is confident in the company’s growth prospects, as it remains focused on strengthening its core, igniting growth, and transforming the foundation.

My personal thoughts on this news are mixed. While the challenging environment in North America is a concern, I am optimistic about Victoria’s Secret’s international growth. The CEO’s comments on new bra launches and reimagining the merchandise positioning and strategy for PINK are also promising. If Victoria’s Secret can successfully execute these initiatives, it may be able to turn around its North American business. Therefore, I recommend holding the stock as it is, and we will continue to monitor its performance throughout the year.

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