Equity Research

Berkshire Grey, Inc.: Initiation of Research Coverage

William Blair initiated research coverage of Berkshire Grey, Inc. (BGRY $9.12). Berkshire Grey develops intelligent enterprise robotics for warehouse automation, fulfillment, and general logistics. Management has targeted achieving positive EBITDA and free cash flow profitability by 2024.

Analyst Nicholas Heymann said, “Berkshire Grey de-SPACed on July 22, 2021, with a strong balance sheet, a suite of internally developed end-to-end warehouse automation solutions, and its sights set on a $1.7 billion pipeline of orders through 2025. We believe the company is well positioned with its core robotic piece-picking and autonomous mobile robotic solutions, and has multiple shots on goal for new product development and rapid market share gains. We are in the early days of a multidecade warehouse automation boom that originated with Amazon’s relentless push toward same-day delivery. This was exacerbated by the global pandemic and enhanced by numerous technological breakthroughs over the last several years. Expectations are for at least 13% annual e-commerce growth globally over the coming decade, with higher growth depending on the type of technological offering.”

Heymann continued, “After exiting stealth mode in 2018, we believe Berkshire Grey is finding its footing in a rapidly evolving market. However, with limited historical financial information and an extremely lumpy sales and order book, the situation remains fluid. We expect the next several months are likely to be a formative period for Berkshire Grey. The company’s ability to win repeat orders from key major customers will prove critical to validating its end-to-end, integrated go-to-market approach. As a result, we believe accelerated order trends with a healthy mix of new customers in addition to its four anchor customers will go a long way toward solidifying the viability of this strategy, and by association the strength of the company’s long-term projections.”

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Current Ratings Distribution (as of 8/15/21)

Coverage Universe
Outperform (Buy): 76%
Market Perform (Hold): 24%
Underperform (Sell): 1%

Inv. Banking Relationships*
Outperform (Buy): 31%
Market Perform (Hold): 13%
Underperform (Sell): 0%

* Percentage of companies in each rating category that are investment banking clients, defined as companies for which William Blair has received compensation for investment banking services within the past 12 months.

The compensation of the research analyst is based on a variety of factors, including the quality and accuracy of research, client feedback, contributions to other firm departments, competitive factors, and firm profitability.

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