Key Points: – President Biden blocked the $14 billion sale of US Steel to Nippon Steel, citing national security concerns. – US Steel and Nippon Steel criticized the decision as political and suggested they may pursue legal action. – The move highlights bipartisan resistance to foreign acquisitions in critical American industries.
In a decision underscoring Washington’s protectionist stance, President Joe Biden on Friday blocked the $14 billion acquisition of Pittsburgh-based US Steel (X) by Japan’s Nippon Steel, citing national security concerns. The move has created significant uncertainty for the iconic 124-year-old steelmaker, whose shares fell more than 7% in morning trading following the announcement.
President Biden stated that the acquisition would “place one of America’s largest steel producers under foreign control and create risk for our national security and critical supply chains.” This rejection aligns with longstanding concerns over foreign influence on critical U.S. industries, even as the Japanese buyer had committed to retaining the US Steel name, headquarters in Pittsburgh, and making significant investments in its plants.
The decision came after months of review by the Committee on Foreign Investment in the United States (CFIUS), which could not reach a consensus. Biden’s executive order now requires the companies to abandon the deal within 30 days unless extended by CFIUS.
The deal faced fierce opposition from the United Steelworkers union, which argued that the acquisition would harm domestic workers and the nation’s steel production capabilities. Biden echoed this sentiment, emphasizing the need for domestic steelmakers to safeguard national interests.
“We need major US companies representing the major share of US steelmaking capacity to keep leading the fight on behalf of America’s national interests,” Biden stated.
In a joint statement, US Steel and Nippon Steel criticized the decision as a “political” move unsupported by credible national security concerns. They hinted at pursuing legal action, stating, “We are left with no choice but to take all appropriate action to protect our legal rights.”
The companies also highlighted their commitments to new investments and ensuring key directors and executives would remain U.S. citizens. They argued that their pledges would strengthen, not undermine, national security.
This decision reflects a growing trend of economic nationalism in U.S. policy. Both Biden and President-elect Donald Trump opposed the deal, signaling bipartisan resistance to foreign acquisitions of critical American industries.
Analysts suggest the decision could deter foreign companies from investing in the U.S. “It’s been a highly politicized process,” said Josh Spoores, CRU North American steel analyst, who pointed out that the decision sends a chilling message to allied countries.
It remains unclear if US Steel will seek a new buyer or pivot its strategy. The rejection is a significant setback after the company spent much of 2024 lobbying for approval. Meanwhile, the steelmaker must navigate the challenges of remaining competitive in a volatile industry.
The Biden administration’s stance may leave long-lasting implications on U.S.-foreign trade relations, especially as protectionist policies continue to shape economic strategy.
New ABL facility marks successful next step in Company’s balance sheet optimization strategy
CHARLOTTE, N.C., Jan. 02, 2025 (GLOBE NEWSWIRE) — NN, Inc. (NASDAQ: NNBR), a global diversified industrial company that engineers and manufactures high-precision components and assemblies, announced today that it has entered into an ABL Credit Agreement governing a new asset-backed senior secured revolving credit facility (the “ABL”). The new ABL Credit Agreement will provide NN Inc. with a $50 million revolving credit facility. The proceeds from the new credit facility were applied to refinance outstanding obligations under the company’s existing asset-backed loan credit agreement.
The new ABL Credit Agreement will carry a maturity of the earlier of two dates, between December 30, 2029, or the date that is 90 days prior to the maturity date of the company’s term loan. PNC Bank, N.A. is the underwriter for the transaction. A summary of the terms of the new credit facility are contained within the company’s recent filing with the Securities and Exchange Commission.
Chris Bohnert, Senior Vice President and Chief Financial Officer commented, “We are pleased to announce the successful refinancing of our revolving credit facility, as this marks an important and positive next step in our comprehensive refinancing efforts. The favorable terms of the new ABL facility reflect the market’s growing confidence in our trajectory, driven by the early success of our company’s enterprise transformation efforts. We thank our lenders for the support shown through this transaction, and we look forward to further advancing our capital structure optimization strategy and utilizing our capital resources to fund our expanding growth programs.”
About NN, Inc.
NN, Inc., a global diversified industrial company, combines advanced engineering and production capabilities with in-depth materials science expertise to design and manufacture high-precision components and assemblies for a variety of markets on a global basis. Headquartered in Charlotte, North Carolina, NN has facilities in North America, Europe, South America, and Asia. For more information about the company and its products, please visit www.nninc.com.
FORWARD-LOOKING STATEMENTS
Except for specific historical information, many of the matters discussed in this press release may express or imply projections of revenues or expenditures, statements of plans and objectives or future operations or statements of future economic performance. These statements may discuss goals, intentions and expectations as to future trends, plans, events, results of operations or financial condition, or state other information relating to NN, Inc. (the “Company”) based on current beliefs of management as well as assumptions made by, and information currently available to, management. Forward-looking statements generally will be accompanied by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “growth,” “guidance,” “intend,” “may,” “will,” “possible,” “potential,” “predict,” “project,” “trajectory” or other similar words, phrases or expressions. Forward-looking statements involve a number of risks and uncertainties that are outside of management’s control and that may cause actual results to be materially different from such forward-looking statements. Such factors include, among others, general economic conditions and economic conditions in the industrial sector; the impacts of pandemics, epidemics, disease outbreaks and other public health crises, on our financial condition, business operations and liquidity; competitive influences; risks that current customers will commence or increase captive production; risks of capacity underutilization; quality issues; material changes in the costs and availability of raw materials; economic, social, political and geopolitical instability, military conflict, currency fluctuation, and other risks of doing business outside of the United States; inflationary pressures and changes in the cost or availability of materials, supply chain shortages and disruptions, the availability of labor and labor disruptions along the supply chain; our dependence on certain major customers, some of whom are not parties to long-term agreements (and/or are terminable on short notice); the impact of acquisitions and divestitures, as well as expansion of end markets and product offerings; our ability to hire or retain key personnel; the level of our indebtedness; the restrictions contained in our debt agreements; our ability to obtain financing at favorable rates, if at all, and to refinance existing debt as it matures; our ability to secure, maintain or enforce patents or other appropriate protections for our intellectual property; new laws and governmental regulations; the impact of climate change on our operations; and cyber liability or potential liability for breaches of our or our service providers’ information technology systems or business operations disruptions. The foregoing factors should not be construed as exhaustive and should be read in conjunction with the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s filings made with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date of this press release, and the Company undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law. New risks and uncertainties may emerge from time to time, and it is not possible for the Company to predict their occurrence or how they will affect the Company. The Company qualifies all forward-looking statements by these cautionary statements.
Investor Relations: Joseph Caminiti or Stephen Poe, Investors NNBR@alpha-ir.com 312-445-2870
Mark Reichman, Managing Director, Equity Research Analyst, Natural Resources, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Corporate guidance for fiscal year 2025. Following AZZ’s strong second quarter earnings report for fiscal year 2025, the company maintained its FY 2025 sales guidance range of $1.525 billion to $1.625 billion, lifted the lower end of adjusted EBITDA to a range of $320 million to $360 million, and increased adjusted diluted EPS expectations to a range of $4.70 to $5.10. During the company’s second quarter investor conference call, management indicated that AZZ had experienced a strong start to the third quarter of fiscal year 2025. Moreover, the tone seemed to indicate that the company’s fiscal year 2025 guidance was grounded in conservative assumptions knowing that the latter half of the fiscal year is generally weaker than the first half due to seasonality.
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*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
Noble Capital Markets Research Report Friday, January 3, 2025
Companies contained in today’s report:
AZZ (AZZ)/OUTPERFORM – Favorable Outlook Through FY 2026; Increasing Estimates
AZZ (AZZ/$82.9 | Price Target: $110) Mark Reichman mreichman@noblefcm.com | (561) 999-2272 Favorable Outlook Through FY 2026; Increasing Estimates Rating: OUTPERFORM
Corporate guidance for fiscal year 2025. Following AZZ’s strong second quarter earnings report for fiscal year 2025, the company maintained its FY 2025 sales guidance range of $1.525 billion to $1.625 billion, lifted the lower end of adjusted EBITDA to a range of $320 million to $360 million, and increased adjusted diluted EPS expectations to a range of $4.70 to $5.10. During the company’s second quarter investor conference call, management indicated that AZZ had experienced a strong start to the third quarter of fiscal year 2025. Moreover, the tone seemed to indicate that the company’s fiscal year 2025 guidance was grounded in conservative assumptions knowing that the latter half of the fiscal year is generally weaker than the first half due to seasonality.
Updating estimates. We have increased our FY 2025 EBITDA and EPS estimates to $346.8 million and $5.05, respectively, from $344.8 million and $5.00. The revisions are driven mostly by higher third quarter margin expectations. Our estimates for FY 2026 revenue, EBITDA, and EPS have been increased to $1.675 billion, $371.5 million, and $5.70, respectively, from $1.673 billion, $367.4 million, and $5.60. We think the incoming Trump administration could support pro-growth economic policies that could favorably impact AZZ’s business.
Noble Capital Markets Research Report Thursday, January 2, 2025
Companies contained in today’s report:
Bit Digital (BTBT)/OUTPERFORM – Executes an MSA with a New Client FAT Brands (FAT)/OUTPERFORM – New Locations
Bit Digital (BTBT/$2.93 | Price Target: $5.5) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | Executes an MSA with a New Client Rating: OUTPERFORM
MSA Underway. On Tuesday, Bit Digital announced the execution of an MSA with an AI Compute Fund managed by DNA Holdings Venture Inc., a new client. The MSA execution builds on the term sheet signed and disclosed on November 20, 2024. The contract provides for 576 Nvidia H200 GPUs over a two-year term and represents an aggregate revenue opportunity of roughly $20.2 million, or $10.1 million annually, and is expected to commence February 2025.
GPUs Ordered. To fulfill the contract, Bit Digital will use GPUs that are currently on order and awaiting delivery to a third-party data center in Iceland. Earlier in December, the Company ordered 130 H200 servers (or 1,040 GPUs) for approximately $30 million. Of those servers, 72 of them will be supplied to the customer, and management expects to deploy the remainder of the servers to separate customer contracts.
FAT Brands (FAT/$5.32 | Price Target: $15) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | New Locations Rating: OUTPERFORM
Business Update. With 2024 coming to a close and the focus on the Twin Hospitality distribution, we wanted to review the ongoing business in terms of new openings for additional expansion. As we have emphasized in the past, the continuing expansion of the overall operating units provides a “cost free” means of improving overall adjusted EBITDA for FAT Brands.
New Openings. Since the beginning of November, or since FAT Brands reported third quarter results, the Company has announced the opening of a number of new locations, including a Hurricane Grill & Wings location in a Six Flags Great Escape Lodge in upstate NY, a Johnny Rockets in the Soaring Eagle Casino Resort in MI, a Pretzelmaker location in Clear Lake, IA, the fifth Round Table Pizza in Reno, NV, and five new locations for Great American Cookies and Marble Slab Creamery in Texas.
Noble Capital Markets Research Report Tuesday, December 31, 2024
Companies contained in today’s report:
Bit Digital (BTBT)/OUTPERFORM – A Tier-3 Data Center Site Acquired Comstock (LODE)/MARKET PERFORM – Comstock Plants a Flag in Pakistan
Bit Digital (BTBT/$3 | Price Target: $5.5) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | A Tier-3 Data Center Site Acquired Rating: OUTPERFORM
New Site. Yesterday, Bit Digital announced the acquisition of real estate and a building for a “build-to-suit” 5MW Tier-3 data center in Montreal, Canada. The 160,000 square feet site was purchased for CAD $33.5 million (or $23.3 million assuming a CAD/USD exchange rate of 0.70) and closed on December 27, 2024. The Company funded the purchase with cash on hand and is in the process of securing mortgage financing for the site acquisition and subsequent infrastructure capex. A new customer is expected to fill the capacity with new-generation Nvidia GPUs.
Building the Site Up. Bit Digital expects to spend roughly CAD $27.6 million (or $19.3 million) to develop the site to meet Tier-3 standards. The initial gross load for the site is at 5MW, which has the potential to expand, allowing scalability by market demand. In our view, the potential allows for the expansion of an owned site with an average cost per MW of $8 million, below market rates. Development is expected to be completed and operational by May 2025.
Comstock (LODE/$0.88) Mark Reichman mreichman@noblefcm.com | (561) 999-2272 Comstock Plants a Flag in Pakistan Rating: MARKET PERFORM
License agreement with Gresham’s Eastern Ltd. Comstock Inc. announced the execution of an agreement between Comstock Fuels and Gresham’s Eastern (Pvt) Ltd., a sustainable energy engineering, equipment, and construction company based in Pakistan, pursuant to which Comstock Fuels will grant Gresham’s exclusive project and site development rights in Pakistan. The agreement will allow Gresham’s to utilize Comstock Fuels’ proprietary and patented lignocellulosic biomass refining technologies to produce sustainable aviation fuel and other renewable fuels in Pakistan.
Demonstration facility in Pakistan. Gresham’s will lead the development, financing, construction, and management of renewable fuel production facilities based on Comstock Fuel’s proprietary Bioleum refining technologies. Gresham’s will develop an initial demonstration facility in Lahore, Pakistan capable of processing 75,000 metric tons of biomass annually with the potential to scale up to a 1,000,000 metric ton per year facility. Site-specific license agreements associated with each Bioleum refinery will help ensure compliance with Comstock Fuels’ performance and quality standards.
Noble Capital Markets Research Report Monday, December 30, 2024
Companies contained in today’s report:
Commercial Vehicle Group (CVGI)/OUTPERFORM – CVG Amends its Credit Agreement
Commercial Vehicle Group (CVGI/$2.34 | Price Target: $8) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | CVG Amends its Credit Agreement Rating: OUTPERFORM
New Amendment. As CVG continues to implement strategic portfolio actions, including paying down debt to create a more streamlined, lower cost entity, the Company amended its credit agreement. In the amendment, CVG’s existing term loan facility is reduced to $85 million from $175 million, while the revolving credit facility is reduced to $125 million from $150 million. At the end of September, CVG had approximately $115 million outstanding under the term loan and $14 million outstanding under the revolver. The maturity date of the credit facilities remains May 12, 2027.
Rate Changes. The new amendment altered the rate and leverage table. If the leverage ratio is 4:1 or above, the maximum SOFR loan rate is now at SOFR +3.25%, and the base rate loan is now at base rate +2.25%. Previously, the maximum rates of SOFR +2.75% and base +1.75% were hit at a leverage ratio of 3.5:1.
Noble Capital Markets Research Report Friday, December 27, 2024
Companies contained in today’s report:
Comtech Telecommunications (CMTL)/MARKET PERFORM – What’s Up With CMTL Shares? Xcel Brands (XELB)/OUTPERFORM – A Noisy Quarter, But In Line With Expectations
Comtech Telecommunications (CMTL/$4.37) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | What’s Up With CMTL Shares? Rating: MARKET PERFORM
Share Price and Volume Action. CMTL shares have experienced some unusual price and volume action recently. With the share price rising each day over the past week, someone is feeling positive about CMTL. Could the recent action suggest a deal for the sale of the Terrestrial and Wireless segment is closer? Business conditions are improving? Something else? While the answer is unknown at this point, CMTL shares bear watching, in our view.
Recent Action. CMTL shares closed at $3.01 on December 19th. The next day, the shares rose to $3.69 on a volume of 2,132,200 shares, about five times ADV. On December 23rd, another 1,074,900 shares were traded, with the stock closing at $3.89. Yesterday, 866,278 shares were traded, with CMTL closing at $4.37, with an intraday high of $4.57, meaning CMTL shares have appreciated over 45% over the past week.
Xcel Brands (XELB/$0.52 | Price Target: $1.75) Michael Kupinski mkupinski@noblefcm.com | (561) 994-5734 Jacob Mutchler jmutchler@noblefcm.com | A Noisy Quarter, But In Line With Expectations Rating: OUTPERFORM
Q3 Results. The company reported Q3 revenue and adj. EBITDA of $1.9 million and a loss of $1.0 million, respectively, both of which were largely in line with our forecast, as illustrated in Figure #1 Q3 Results. Notably, the quarter was impacted by Hurricanes, which led to canceled shows and delayed sales, resulting in roughly $500,000 of lost revenue. Importantly, we believe the company’s long term growth outlook remains favorable.
Looking past the Noise. In Q3, the company recorded a non-cash charge of $6.3 million, which is related to its equity interest in Isaac Mizrahi. The write-down anticipates that the company may not meet the minimum royalty threshold in 2025, which would result in a decrease in its ownership interest in Isaac Mizrahi from 30% to 17.5%.
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Noble Capital Markets Research Report Thursday, December 26, 2024
Companies contained in today’s report:
Perfect (PERF)/OUTPERFORM – Turning on the Acquisition Engine
Perfect (PERF/$2.22 | Price Target: $5) Patrick McCann, CFA pmccann@noblefcm.com | (314) 724-6266 Michael Kupinski mkupinski@noblefcm.com | (561) 994-5734 Turning on the Acquisition Engine Rating: OUTPERFORM
Acquisition of Wannaby. On December 24, the company announced that it has entered into an agreement to acquire Wannaby from Fartech, a British e-commerce company. Wannaby is a virtual try-on technology operation that focuses on shoes and accessories, such as handbags. The addition of Wannaby’s technology is set to expand Perfect’s suite of virtual try-on capabilities.
Expanding service offering. The addition of Wannaby’s virtual try-on capabilities should open new revenue verticals. It also allows the company to provide a more all-encompassing suite of virtual try-on services to existing and perspective brand clients. We believe this will bolster the company’s competitive position and could lead to higher B2B contract values and enhanced revenue growth.
Comstock (LODE/$0.39) Mark Reichman mreichman@noblefcm.com | (561) 999-2272 Partnership Seeks to Enhance Low Carbon Renewable Fuel Yields Rating: MARKET PERFORM
Partnership with Emerging Fuels Technology, Inc. (EFT). Under terms of a Technology Cooperation Agreement, Comstock will enter into a Master License Agreement with Emerging Fuels Technology, Inc. (EFT) to integrate EFT’s gas-to-liquids (GTL) process into Comstock’s renewable fuel solutions to capture and convert carbon emissions into emissions derived renewable fuels. Commercialization of existing and future Comstock Fuels Corporation’s renewable fuel technologies, including those developed through its partnership with EFT, will be managed exclusively by Comstock Fuels.
The goal. Integrating EFT’s GTL process to convert process emissions offers the potential to increase Comstock’s bulk biomass conversion yields to more than 140 gasoline gallon equivalents (GGE) and greater than 70% of the maximum yield from most forms of woody biomass. Because up to 20% of feedstock value could otherwise be lost to process emissions, converting a portion of the losses into additional yield with EFT’s commercial solution could enhance market adoption of the companies’ combined offering.
Noble Capital Markets Research Report Monday, December 23, 2024
Companies contained in today’s report:
Maple Gold Mines (MGMLF)/OUTPERFORM – Setting Up for an Eventful 2025
Maple Gold Mines (MGMLF/$0.04 | Price Target: $0.25) Mark Reichman mreichman@noblefcm.com | (561) 999-2272 Setting Up for an Eventful 2025 Rating: OUTPERFORM
Completion of the restructuring transaction. As expected, Maple Gold Mines recently completed its joint venture restructuring transaction with Agnico Eagle Mines Ltd. (NYSE, AEM). Maple has legal title to and a 100% ownership interest in the Douay Gold Project with gold mineral resources exceeding 3.0 million ounces and the past-producing, high-grade Joutel Gold Project. Both projects are located along the Casa Berardi-Douay Gold Trend in the renowned Abitibi Greenstone Gold Belt in Quebec, Canada.
Upcoming drilling program. Maple Gold’s fully funded drilling program is expected to commence shortly and run through March. The company is using a data-driven approach toward exploration that is focused on expanding the company’s gold mineral resource from approximately three million ounces to five million ounces across the combined Douay/Joutel projects, along with making new discoveries. An updated resource estimate and scoping study is expected to be completed within the next 12 to 18 months (Refer to our research note dated December 12 for more details).
Noble Capital Markets Research Report Friday, December 20, 2024
Companies contained in today’s report:
Great Lakes Dredge & Dock (GLDD)/OUTPERFORM – $182 Million of Awarded Work Steelcase (SCS)/OUTPERFORM – Reports Third Quarter Results
Great Lakes Dredge & Dock (GLDD/$11.55 | Price Target: $14) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | $182 Million of Awarded Work Rating: OUTPERFORM
Awarded Work. Great Lakes announced an additional $182 million of awarded work across four projects. The new projects were part of the $465 million of low bids and options pending as of the end of the third quarter. The new awards will add to a record backlog of work for 2025 and are likely to keep Great Lakes’ fleet fully engaged during the year. The projects are all for coastal protection.
Projects. Ocean City Beach Renourishment in New Jersey is valued at $73.6 million. This project also includes an additional $41.4 million in open options pending award. This project will start in 1Q25 and is expected to be completed in 3Q25. Myrtle Beach Renourishment in South Carolina is valued at $72.3 million. Work is expected to start in 4Q25 and be completed in 1Q26. Both projects were awarded by the U.S. Army Corps of Engineers.
Steelcase (SCS/$12.32 | Price Target: $16) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | Reports Third Quarter Results Rating: OUTPERFORM
3Q25 Results. Revenue was $794.9 million, up 2.1% y-o-y, with higher revenue from government, large corporate, healthcare, and education customers as the drivers. Organic revenue was up 3%, with Americas up 7% and International off 8%. Gross margin came in at 33.4%, up 100 bp y-o-y. GAAP EPS totaled $0.16 versus $0.26, while adjusted EPS was $0.30 versus $0.29.
Green Shoots. Orders in the first three weeks of 4Q25 grew 15% y-o-y. Internationally, Steelcase is seeing higher project activity levels, with recent wins related to large opportunities with national accounts in France, Germany, and the Middle East. Continuation of such trends would bode well for future performance.
Noble Capital Markets Research Report Wednesday, December 18, 2024
Companies contained in today’s report:
Comstock (LODE)/MARKET PERFORM – Investment Rating Lowered to Market Perform Cumulus Media (CMLS)/MARKET PERFORM – Highlights From NobleCon20 MAIA Biotechnology (MAIA)/OUTPERFORM – Pediatric Designation Qualifies THIO For A Priority Review Voucher Tonix Pharmaceuticals (TNXP)/OUTPERFORM – Tonix Announces FDA Acceptance Of NDA For Review
Comstock (LODE/$0.37) Mark Reichman mreichman@noblefcm.com | (561) 999-2272 Investment Rating Lowered to Market Perform Rating: MARKET PERFORM
Reassessing the path to commercialization. We are lowering our investment rating to a Market Perform from Outperform. While Comstock has made significant progress advancing its business unit plans, we think the path toward commercializing its Fuels and Metals businesses could take longer than we previously expected and is subject to a number of risk factors, including execution and financing. Based on the company’s liquidity, anticipated capital requirements, risk and reward profile, and lead time associated with commercializing its businesses, we think a Market Perform is appropriate.
SBC Commerce transaction. In August, Comstock announced a significant and promising transaction with SBC Commerce LLC (SBCC), a U.S. based private equity group, to directly invest in each of Comstock’s businesses and acquire Comstock’s properties in Silver Springs, Nevada. Our previous valuation and price target were based in part on the implied value of the transaction. To date, no definitive agreement has been announced with SBC Commerce, and it is unclear to us whether the transaction will close as contemplated. We look forward to an update and will wait to assess any final agreement(s).
NobleCon20. On December 4, Frank Lopez-Balboa, CFO, presented at NobleCon20 at Florida Atlantic University (FAU) in Boca Raton, Florida, to the investment community. A replay of the presentation can be viewed here. Notably, the presentation highlighted the prospect of digital revenue growth, a national advertising recovery, which accounts for roughly 50% of revenue, and its sizeable cost reduction efforts.
Digital Outlook. Notably, digital revenue has been a bright spot for the company throughout 2024, given that revenue growth has been positive every quarter. Mr. Frank Lopez-Balboa highlighted his optimism about the company’s digital growth prospects, stating it could generate north of $200 million in revenue a few years from now. Moreever, digital offers healthy contribution margins.
MAIA Biotechnology (MAIA/$2.2 | Price Target: $14) Robert LeBoyer rleboyer@noblefcm.com | (212) 896-4625 Pediatric Designation Qualifies THIO For A Priority Review Voucher Rating: OUTPERFORM
Successful Development Could Qualify For A Valuable Asset. Maia announced that THIO has received FDA designation as a drug for a rare pediatric disease (RPD) when used to treat pediatric-type diffuse high-grade gliomas (PDHGG). This designation makes MAIA eligible to receive a Priority Review Voucher (PRV) upon approval. The PRV can be redeemed for priority review for a different new drug application or sold to another company. During 2024, PRVs have been sold for between $100 million and $158 million.
Data In Pediatric Brain Cancer Was Presented In April 2024. MAIA presented clinical data testing THIO in the PDHGG indication at the American Association for Cancer Research (AACR) Annual Meeting in April 2024. Patients with a highly aggressive subtype of PDHGG known as diffuse intrinsic pontine glioma (DIPG) were treated with ionizing radiation and THIO. The results showed significant decreases in cell proliferation and anti-cancer effects.
Tonix Pharmaceuticals (TNXP/$0.33 | Price Target: $4) Robert LeBoyer rleboyer@noblefcm.com | (212) 896-4625 Tonix Announces FDA Acceptance Of NDA For Review Rating: OUTPERFORM
New Drug Application For Tonmya Accepted For Review. Tonix announced that the FDA has accepted the filing of the Tonmya NDA, showing that the application met the requirements for a full review. Tonmya received Fast Track designation, and an application for Priority Review was filed. Next, notification of the assigned PDUFA date (the statutory date for completing a review under the Prescription Drug User Fee Act) and Priority Review status are expected in about 14 days.
We Believe Tonmya Can Have A Significant Impact On Fibromyalgia Treatment. Symptoms of fibromyalgia include chronic pain, insomnia, depression, brain fog, fatigue, and abdominal cramps with varying severity. This variety of physical and cognitive symptoms has been treated with a combination of pain medications, anti-depressants, insomnia drugs, and neurological drugs. Tonmya is the first drug that was developed for fibromyalgia. Its clinical trials showed strong statistical significance in its primary endpoint (pain reduction) and all six secondary endpoints. No other single drug has shown this broad effect on multiple fibromyalgia symptoms.
Noble Capital Markets Research Report Tuesday, December 17, 2024
Companies contained in today’s report:
Comtech Telecommunications (CMTL)/MARKET PERFORM – Late 1Q25 Financials Lucky Strike Entertainment (LUCK)/OUTPERFORM – A New Chapter as Lucky Strike The GEO Group (GEO)/MARKET PERFORM – An Investment and a Leadership Change Townsquare Media (TSQ)/OUTPERFORM – Timeliness Appears To Have Improved
Comtech Telecommunications (CMTL/$3.3) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | Late 1Q25 Financials Rating: MARKET PERFORM
A NT10-Q. Comtech missed the deadline for filing its 10-Q for the period ended October 31, 2024, the first quarter of the Company’s fiscal 2025. Unfortunately, this is another late filing, following an NT10-K for the 2024 fiscal year and an NT10-Q for the fiscal third quarter of 2024. We are hopeful the Company will be able to file the required documents shortly.
Reasons. According to the 12b-25 filing, Comtech is unable to file on a timely basis due to “the Company’s ongoing efforts to finalize its condensed consolidated financial statements, which include: (i) its recoverability assessments of (x) receivables and contract assets related to a certain international reseller of our troposcatter technologies, and (y) goodwill and certain long-lived assets due to the Company’s ongoing evaluation of its strategic transformation plans; and (ii) the accounting for and presentation of certain debt instruments and exchanges of convertible preferred shares.”
Lucky Strike Entertainment (LUCK/$10.52 | Price Target: $17.5) Michael Kupinski mkupinski@noblefcm.com | (561) 994-5734 Jacob Mutchler jmutchler@noblefcm.com | A New Chapter as Lucky Strike Rating: OUTPERFORM
Complete rebrand to Lucky Strike. On December 12, the company announced that it had completed its recently announced rebranding to Lucky Strike Entertainment, which was effective on December 16th. The newly branded company will trade on the NYSE under the symbol “LUCK” as of today.
An acquired brand. The company acquired Lucky Strike Entertainment in September of last year. At that time, management noted that the company would test the brand strength of Lucky Strike in comparison with the Bowlero brand. We believe that Lucky Strike has a strong brand presence and is a compelling change for the company.
The GEO Group (GEO/$27.73) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | An Investment and a Leadership Change Rating: MARKET PERFORM
Ramping Up. The GEO Group announced a $70 million investment to expand the Company’s detention capacity, secure transportation, and electronic monitoring services to U.S. Immigration and Customs Enforcement (“ICE”). Already the largest services provider to ICE, GEO is currently providing approximately 21,000 detention beds (with a present census of 14,000) at 16 ICE Processing Centers with the ability to expand to a minimum of 32,000 beds at 23 facilities.
Financing. To help offset the $70 million investment in capital expenditures and further reduce debt, GEO intends to pursue the possible sale of several underperforming company-owned state correctional facilities. Any potential sale of facilities will depend, at least partially, on valuation, but we view this positively.
Townsquare Media (TSQ/$10.08 | Price Target: $21) Michael Kupinski mkupinski@noblefcm.com | (561) 994-5734 Jacob Mutchler jmutchler@noblefcm.com | Timeliness Appears To Have Improved Rating: OUTPERFORM
Digital revenue trends are improving. On December 4, Stu Rosenstein, CFO, presented at NobleCon20 at Florida Atlantic University (FAU) in Boca Raton, Florida, to the investment community. A replay of the presentation can be viewed here. Notably, we believe the company’s digital businesses are gaining momentum, and we anticipate an acceleration of revenue growth for Ignite and a swing towards positive growth for Interactive.
Townsquare Interactive posed to turn the corner toward revenue growth. Notably, the company’s Interactive business has been experiencing improving revenue trends and net subscriber growth throughout 2024. Furthermore, we believe the interactive business has turned the corner in Q3 and will swing towards positive revenue growth in Q4.
Noble Capital Markets Research Report Monday, December 16, 2024
Companies contained in today’s report:
Aurania Resources (AUIAF)/OUTPERFORM – Looking Ahead to a Catalyst-Rich 2025 Vince Holding Corp. (VNCE)/OUTPERFORM – A Closer Look At The Recent Quarter
Aurania Resources (AUIAF/$0.313 | Price Target: $0.6) Mark Reichman mreichman@noblefcm.com | (561) 999-2272 Looking Ahead to a Catalyst-Rich 2025 Rating: OUTPERFORM
Private placement financing. Aurania announced the closing of the first tranche of its recently announced private placement of up to 8,888,888 units at a price of C$0.45 per unit to raise gross proceeds of up to C$4,000,000. In the first tranche, a total of 2,726,499 units were sold for gross proceeds of C$1,226,924.55. Each unit is comprised of one common share and one common share purchase warrant. Each warrant entitles the holder to purchase one common share at an exercise price of C$0.75 for a period of 24 months following the closing of the first tranche. The net proceeds will be used to fund exploration in France including impact studies, exploration programs at key targets in Ecuador, and working capital.
Preparing for 2025. In November, Aurania commenced an induced polarization (IP) geophysical survey over its Kuri-Yawi epithermal gold target at the company’s Lost Cities-Cutucu project in southeastern Ecuador. The IP survey is designed to identify deep conductors that could correspond to gold mineralization and to target drill holes for the planned program in 2025. The IP survey is expected to be completed this month with results expected in early 2025 following a review and interpretation of the data.
Vince Holding Corp. (VNCE/$1.57 | Price Target: $3) Michael Kupinski mkupinski@noblefcm.com | (561) 994-5734 Jacob Mutchler jmutchler@noblefcm.com | A Closer Look At The Recent Quarter Rating: OUTPERFORM
Solid Q3 Results. The company reported favorable Q3 revenue of $80.2 million and adj. EBITDA of $7.1 million, both of which were in line with our estimates of $81.5 million and $7.0 million, respectively. Furthermore, gross margin improved by 580 basis points from the prior year period. In our view, the solid results demonstrate the efficacy of the company’s initiatives to enhance its expense structure and improve gross margins.
Improved gross margin. The company’s strong gross margin improvement was largely driven by a 480bp improvement in product costs and reduced freight costs, with an 80bp contribution from lower promotional activity and discounting in its Direct To Consumer (DTC) segment.
Noble Capital Markets Research Report Friday, December 12, 2024
Companies contained in today’s report:
1-800-Flowers.com (FLWS)/OUTPERFORM – Highlights From NobleCon20 Conduent (CNDT)/OUTPERFORM – Highlights from NobleCon20 Snail (SNAL)/OUTPERFORM – Highlights From NobleCon20
1-800-Flowers.com (FLWS/$7.94 | Price Target: $14) Michael Kupinski mkupinski@noblefcm.com | (561) 994-5734 Jacob Mutchler jmutchler@noblefcm.com | Highlights From NobleCon20 Rating: OUTPERFORM
NobleCon20. On December 3rd, management presented at NobleCon20 at Florida Atlantic University (FAU) in Boca Raton, Florida, to the investment community. The presentation conducted by Bill Shea, CFO, highlights the company’s strategic initiatives to grow revenue and return to a normalized gross margin. A replay of the presentation can be viewed here.
A transitional year. Revenue guidance is flat to down mid single digits, but should start to grow again next year. The key growth drivers are expected to be led by its innovation initiatives, introduction of new products (ie. most recently, Cheryl’s Ice Cream, Wolferman’s New York Style Bagels, and Greeting Cards), bundling products (ie. Harry & David’s baskets with Shari’s Berries), products with new price points, and driving repeat customers. Plus, the company believes there is more to do with its 1.1 million Passport Loyalty customers, which is 10% of its customer base but accounts for over 20% of its revenues.
Conduent (CNDT/$4.32 | Price Target: $7) Patrick McCann, CFA pmccann@noblefcm.com | (314) 724-6266 Michael Kupinski mkupinski@noblefcm.com | (561) 994-5734 Highlights from NobleCon20 Rating: OUTPERFORM
NobleCon20. On December 3, management presented at NobleCon20 at Florida Atlantic University (FAU) in Boca Raton, Florida. Giles Goodburn, Global Head of FP&A and Investor Relations, highlighted the company’s ongoing transformation to a leaner, more focused organization. A replay of the presentation can be found here.
Business transformation underway. Since the start of 2024, the company has completed several divestitures totaling roughly $780 million in net proceeds. This has allowed the company to make significant balance sheet improvements. The company is also in the process of cutting corporate overhead and various stranded costs following the recent divestitures. Moreover, with an infusion of new business leaders across its three segments we believe the company is positioning itself for future revenue growth as a more focused and efficient organization.
Snail (SNAL/$1.4 | Price Target: $4) Michael Kupinski mkupinski@noblefcm.com | (561) 994-5734 Jacob Mutchler jmutchler@noblefcm.com | Highlights From NobleCon20 Rating: OUTPERFORM
NobleCon20. On December 3rd, management presented at NobleCon20 at Florida Atlantic University (FAU) in Boca Raton, Florida, to the investment community. The presentation conducted by Tony Tian, CEO, and Heidy Chow, CFO, highlighted the company’s release roadmap, strategy, and unique offerings. A replay of the presentation can be viewed here.
Release roadmap. There are five free Downloadable Content (DLC) packages that are included in the sale of Ark: Survival Ascended (ASA), three of which have not been released yet. The next DLC is expected in Q4, and two more are expected in 2025. Importantly, as DLC packages included in ASA are released, the company will defer less revenue from ASA sales, which should provide investors with a clearer picture of company operating results.
Noble Capital Markets Research Report Thursday, December 12, 2024
Companies contained in today’s report:
Maple Gold Mines (MGMLF)/OUTPERFORM – Thoughts on the Winter 2024/2025 Exploration and Drilling Program Resources Connection (RGP)/OUTPERFORM – Workforce Reduction Initiated; Confirms 2Q25 Guidance The GEO Group (GEO)/MARKET PERFORM – NobleCon20 Highlights The ODP Corporation (ODP)/OUTPERFORM – Presentation Highlights from NobleCon20
Maple Gold Mines (MGMLF/$0.04 | Price Target: $0.25) Mark Reichman mreichman@noblefcm.com | (561) 999-2272 Thoughts on the Winter 2024/2025 Exploration and Drilling Program Rating: OUTPERFORM
NobleCon20 presentation. During Noble’s recent NobleCon20 Annual Emerging Growth Equity Conference, Mr. Kiran Patankar, Maple Gold’s CEO, provided some additional details regarding the company’s upcoming exploration and drilling program. A link to Maple Gold’s NobleCon20 presentation is here. Recall that Maple Gold has a 400 square kilometer district-scale property in Quebec’s Abitibi Greenstone Gold Belt, including gold mineral resources of approximately three million ounces at Douay with significant expansion potential and the past producing Telbel and Eagle West mines at Joutel.
Upcoming drilling program. Maple Gold’s fully funded drilling program is expected to commence shortly and run through March. The company is using a data-driven approach toward exploration that is focused on expanding the company’s gold mineral resource from approximately three million ounces to five million ounces across the combined Douay/Joutel projects, along with making new discoveries. An updated resource estimate and scoping study is expected to be completed within the next 12 to 18 months.
Workforce Reduction. We had an opportunity to speak with management about the December 6th 8-k filing in which Resources Connection announced a reduction in the global management and administrative workforce intended to enhance efficiencies through reduced costs and streamlined operations. The RIF impacts about 8% of the management and administrative workforce. Cost savings are expected to range from $4-$5 million in 2H25, or $8-$10 million annually on a go-forward basis. Restructuring charges of $2.5-$3.0 million are expected to be recognized in the third quarter of fiscal 2025.
But Reaffirming 2Q25 Guidance. Management re-confirmed guidance for 2Q25 (ended November 23, 2024). For 2Q25, the Company expects full quarter revenue to be in the range of $135-$140 million and expects gross margin to be in the range of 36% to 37%. The Company’s run rate SG&A for the quarter is expected to be in the range of $48-$50 million.
NobleCon20. The GEO Group CEO Brian Evans presented at NobleCon20. Highlights included potentially improving segment trends, an aging prison infrastructure, and reducing debt to be more flexible. A rebroadcast is available at https://www.channelchek.com/videos/the-geo-group-noblecon20-replay.
Segment Trends. With the new Trump administration approaching in January, management notes the administration’s immigration enforcement policies may positively impact its detention capacity, electronic monitoring, and secure transportation businesses. GEO remains poised to capitalize on any increase in detention and/or enhanced supervision with roughly 8,000 beds at existing facilities and 10,000 beds at six company-owned currently idle facilities. In addition, ISAP populations were roughly double today’s level two years ago.
The ODP Corporation (ODP/$28.29 | Price Target: $35) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | Presentation Highlights from NobleCon20 Rating: OUTPERFORM
NobleCon20. The ODP Corporation Co-CFO Adam Haggard and VP of IR Tim Perrott presented at NobleCon20. Highlights included are the Company’s pivot towards B2B, targeting new markets, and the return of value to shareholders.
B2B Pivot. Noted in our previous report, ODP is accelerating its B2B pivot through leveraging its nationwide supply chain, extensive B2B customer base, compelling value proposition, and strong balance sheet. A recent B2B win involves the Company’s ODP Business Solutions with a recent key contract win that is worth up to $1.5 billion over 10 years. Another involves Veyer with a major contract with one of the world’s largest social media focused e-commerce companies to deliver warehouse and fulfillment services for their online sales. In our view, both contracts represent management’s focus on its efforts within the space.
Noble Capital Markets Research Report Wednesday, December 11, 2024
Companies contained in today’s report:
FAT Brands (FAT)/OUTPERFORM – Highlights from NobleCon20 Great Lakes Dredge & Dock (GLDD)/OUTPERFORM – NobleCon20 Highlights V2X (VVX)/OUTPERFORM – A New JV Vince Holding Corp. (VNCE)/OUTPERFORM – Q3 Is Illustrative Of Its Improving Margin Story
FAT Brands (FAT/$5.53 | Price Target: $15) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | Highlights from NobleCon20 Rating: OUTPERFORM
Acquisition Strategy. Management noted the Company utilizes a near-term focus on brands that will accelerate growth for its Twin Peaks brand as well as drive revenue and profit at its cookie and pretzel factory. Smokey Bones is an example of accelerating Twin Peaks growth as select Smokey Bones are being converted into Twin Peaks due to having a similar format, providing more efficient conversions. The Nestle Toll House Café by Chip acquisition drove unit growth of Great American Cookies while also getting cookie dough business for its manufacturing facility.
Dredging Market. The outlook for the dredging market remains robust, in our view. The Army Corps of Engineers budget in fiscal 2024 was a record $8.7 billion, a record that likely will be surpassed in fiscal 2025 as both the House and Senate appropriations committees submitted proposed fiscal 2025 budgets with Army Corp funding at or above the $10 billion level. We expect Great Lakes’ bid opportunity pipeline to remain strong, leading towards potential backlog and revenue growth.
JV. Yesterday, V2X, Inc. announced a strategic joint venture with Parsons Corporation (NYSE: PSN) in pursuit of the National Science Foundation Antarctica Science and Engineering Support Contract (ASESC) with an $8 billion ceiling value. The newly formed joint venture, named Polar Science Alliance (PSA), is a wholly dedicated entity that will enable world class scientific research support services for the United States Antarctic Program (USAP) over the next two decades.
Strengths. V2X brings over a decade of experience in large-scale polar operations and logistics expertise and was recently awarded the follow-on option for a ten year period supporting the multibillion-dollar U.S. Space Force, Pituffik Space Base in Greenland. V2X boasts decades of expertise in science support services. Parsons has 55 years of successful and proven polar operations experience, beginning in 1970 on the North Slope of Alaska. Parsons’ capabilities span program and construction management, engineering and planning, and logistics.
Vince Holding Corp. (VNCE/$1.69 | Price Target: $3) Michael Kupinski mkupinski@noblefcm.com | (561) 994-5734 Jacob Mutchler jmutchler@noblefcm.com | Q3 Is Illustrative Of Its Improving Margin Story Rating: OUTPERFORM
Q3 Results. The company reported Q3 revenue of $80.2 million, which was in line with our estimate of $81.5 million. Notably, gross margin improved by 580 basis points from the prior year period. We believe the solid results demonstrate the efficacy of the company’s initiatives to enhance its expense structure andimprove gross margin.
Improved gross margin. The company’s strong gross margin improvement was largely driven by a 480bp improvement in product costs and reduced freight costs, with an 80bp contribution from lower promotional activity and discounting in its Direct To Consumer (DTC) segment.
Noble Capital Markets Research Report Tuesday, December 10, 2024
Companies contained in today’s report:
E.W. Scripps (SSP)/OUTPERFORM – Highlights From NobleCon20 GDEV (GDEV)/OUTPERFORM – Highlights From NobleCon20: Geared For Growth GeoVax Labs (GOVX)/OUTPERFORM – GeoVax Receives Allowance For New Patent Covering Vaccine Platform Technologies Graham (GHM)/OUTPERFORM – NobleCon20 Presentation Highlights Information Services Group (III)/OUTPERFORM – Highlights from NobleCon20 NN (NNBR)/OUTPERFORM – Presentation Highlights from NobleCon20
E.W. Scripps (SSP/$2.36 | Price Target: $10) Michael Kupinski mkupinski@noblefcm.com | (561) 994-5734 Jacob Mutchler jmutchler@noblefcm.com | Highlights From NobleCon20 Rating: OUTPERFORM
NobleCon20. On December 3rd, management presented to the investment community at NobleCon20, held at Florida Atlantic University (FAU) in Boca Raton, Florida. The fireside chat presentation with Jason Combs, Chief Financial Officer, highlighted the company’s strategy regarding Scripps Sports, retransmission revenue, political revenue and debt reduction. A replay of the presentation can be viewed by clicking here.
Favorable sports model. Scripps Sports employs a unique model that offers sports teams wider viewership than the traditional Regional Sports Networks (RSNs) model, which is failing. Notably, the company has local broadcasting rights for the Las Vegas Golden Knights, Florida Panthers, and the Arizona Coyotes. Furthermore, the company has the national broadcast rights for the WNBA, which has seen a significant increase in viewership this season.
GDEV (GDEV/$23 | Price Target: $70) Michael Kupinski mkupinski@noblefcm.com | (561) 994-5734 Jacob Mutchler jmutchler@noblefcm.com | Highlights From NobleCon20: Geared For Growth Rating: OUTPERFORM
NobleCon20. On December 3rd, management presented to the investment community at NobleCon20, held at Florida Atlantic University (FAU) in Boca Raton, Florida. The presentation was conducted by Alexander Karavaev, chief financial officer, and Roman Safiyulin, chief corporate development officer. The duo highlighted the company’s dynamic growth prospects and the prospective swing toward growth in bookings. A replay of the presentation can be viewed by clicking here.
Dynamic business model. The company focuses on live-service games, meaning that the games have a continuous lifespan and are updated on an ongoing basis. This allows for a stable revenue base that grows over time, unlike many gaming companies with a “lumpier” revenue profile that oscillates based on game release schedules.
GeoVax Labs (GOVX/$2.6 | Price Target: $12) Robert LeBoyer rleboyer@noblefcm.com | (212) 896-4625 GeoVax Receives Allowance For New Patent Covering Vaccine Platform Technologies Rating: OUTPERFORM
Intellectual Property Estate Is Expanding. GeoVax announced that the US Patent and Trademark Office has issued a Notice of Allowance for its patent application covering the expression of antigens in virus-like particles delivered with a viral vector. This is a mechanism used to stimulate an immune response from the GeoVax MVA-based vaccines. The patent allowance is the final step in the USPTO application process, and the patent will be issued after payment of fees.
The Application Covers Expression Of Immune Stimulation Antigens. The patent titled “Vaccinia Viral Vectors Encoding Chimeric Virus Like Particles” includes claims for expressing a tumor associated antigen (TAA) in virus-like particles (VLPs) from a recombinant Modified Vaccinia Ankara (MVA) viral vector. This covers vaccines that use the MVA as a vector to deliver DNA that assembles into non-infectious virus-like constructs to simulate an immune response against the targeted virus. This mechanism is used in the MVA MUC-1 (cancer) and infectious disease vaccines. A detailed description of the MVA platform and VLPs begins on page 7 of our Initiation of Coverage report.
Graham (GHM/$43.25 | Price Target: $45) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | NobleCon20 Presentation Highlights Rating: OUTPERFORM
NobleCon20. Graham CFO Chris Thome and Vice President Matt Malone presented at NobleCon20. Highlights included the growth potential in U.S. Navy contracts, revenue diversification in the Space Segment, and M&A strategy. A rebroadcast is available at https://www.channelchek.com/videos/graham-corporation-noblecon20-replay.
Potential in U.S. Navy. The Navy’s Ford Class Carrier and Virginia and Columbia Class Submarines represent $1.2 to $1.4 billion in revenue potential based on planned projects. These project build timelines are expected to be completed as early as 2035 to as late as 2058, providing visibility and recurring revenue. With investments from defense customers to expand capacity and 80% of its defense revenue sole sourced, we believe Graham is uniquely positioned to expand its relationship with the Navy and other defense customers.
Information Services Group (III/$3.68 | Price Target: $5) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | Highlights from NobleCon20 Rating: OUTPERFORM
NobleCon20. Information Services Group CEO Michael Connors and CFO Michael Sherrick presented at NobleCon20. Management highlighted the opportunity in AI, including ISG Tango, and driving recurring revenue. A rebroadcast is available at https://www.channelchek.com/videos/information-services-group-noblecon20-replay.
Growth in AI. The opportunity in AI for ISG is prevalent, as management noted that 55% of large enterprises are focused on developing an AI roadmap today. This focus translates into a roughly 3 times increase in projected enterprise AI spending through 2025. ISG has two services in AI Advisory and Research that companies can utilize for the application of AI and to be informed on the best use cases. In our view, ISG is well-equipped to handle increased demand through its services.
NN (NNBR/$3.9 | Price Target: $6) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | Presentation Highlights from NobleCon20 Rating: OUTPERFORM
NobleCon20. NN CFO Chris Bohnert presented at NobleCon20. Highlights included tariffs being a benefit to the Company, NN’s transformation plan, and its five-year growth plan. A rebroadcast is available at https://www.channelchek.com/videos/nn-inc-noblecon20-replay.
Tariffs Good for NN? The Trump administration is seeking protection for U.S. based production through the use of tariffs, potentially increasing costs for companies. However, NN has roughly $120 million of tariff-protected U.S.-produced auto parts and does not import from China. For its China operations, the Company produces auto parts in China for use in the local market there. As a result, we believe the Company can protect its margins through not paying tariffs and can potentially have pricing power over parts produced in the U.S. compared to other companies that import.
Noble Capital Markets Research Report Monday, December 9, 2024
Companies contained in today’s report:
Bit Digital (BTBT)/OUTPERFORM – November Production Numbers Are In DLH Holdings (DLHC)/OUTPERFORM – New Administration Brings More Opportunity Kelly Services (KELYA)/OUTPERFORM – Another $50 Million Share Repurchase Authorized Schwazze (SHWZ)/OUTPERFORM – Update on Accounting
Bit Digital (BTBT/$4.88 | Price Target: $5.5) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | November Production Numbers Are In Rating: OUTPERFORM
HPC and AI. As of November 30, 2024, Bit Digital had 266 servers actively generating revenue and earned approximately $4.3 million of total unaudited GPU Cloud revenue during the month. At Enovum’s data center, the Company had 13 customers actively generating revenue with colocation revenue of approximately $503,500. We believe the Boosteroid agreement, along with the two MSAs signed in the third quarter should expand revenue in the coming months.
Mining Side. The Company produced 44.9 BTC in the month, a 14.0% decrease from 52.2 BTC in October. The active hash rate was 2.51 EH/s, a slight increase from 2.43 EH/s last month. Bit Digital’s hosting provider, Coinmint, being acquired resulted in the termination of hosting contracts. Management has signed term sheets for the lost hosting capacity and is replacing energy inefficient miners, with a 3.0 EH/s active hash rate expected by the first half of 2025.
DLH Holdings (DLHC/$8.08 | Price Target: $15) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | New Administration Brings More Opportunity Rating: OUTPERFORM
4Q Results. Reported revenue was $96.4 million compared to $101.5 million from last year and below our $101 million estimate. Net income for the quarter was $2.3 million, or $0.16/sh, compared to a net loss of $2.6 million, or $0.18/sh, last year. Adjusted EBITDA was $10.7 million, down from $12.1 million last year but above our estimate of $10.5 million.
CMOP. Management noted that the Company’s CMOP portfolio is under new task orders that go into the second quarter of 2025. Significantly, the Company has not continued its joint venture bids for specific locations, citing performance dilution. We expect DLH to bid on fewer CMOP contracts, resulting in lower CMOP revenue, likely once past the current extension.
Kelly Services (KELYA/$14.33 | Price Target: $27) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | Another $50 Million Share Repurchase Authorized Rating: OUTPERFORM
New Authorization. Kelly’s Board of Directors approved a new share repurchase program, authorizing the Company to purchase up to $50 million of its Class A common stock. The authorization expires on December 2, 2026. Shares under the authorization may be purchased from time to time in the open market, in privately negotiated transactions, or by other means.
Size. The $50 million authorization represents approximately 10% of Kelly’s current Class A market capitalization. We believe any potential share repurchases will be balanced against continued paydown of debt, additional M&A opportunities, and re-investment in the business to drive organic growth.
Schwazze (SHWZ/$0.06 | Price Target: $4) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | Update on Accounting Rating: OUTPERFORM
Update. Schwazze, in conjunction with its new auditors, has determined that its financial statements for the two fiscal years ended December 31, 2023, will be restated due to the identification of certain accounting adjustments needed primarily relating to technical accounting areas. The Company filed an 8-k describing the necessary adjustments.
Impact. Although mostly related to technical accounting areas, the Company has concluded that the impact of these corrections is material and, therefore, worthy of restatement. However, Schwazze does not currently believe that the foregoing corrections will have any negative material impact on the Company’s revenue, adjusted EBITDA, cash from operations, or cash position.
Noble Capital Markets Research Report Monday, November 27, 2024
Companies contained in today’s report:
AZZ (AZZ)/OUTPERFORM – Increasing Our FY2025 and FY2026 Estimates and Price Target Codere Online (CDRO)/OUTPERFORM – Q3 Beat Despite Exchange Rate Headwinds MustGrow Biologics Corp. (MGROF)/MARKET PERFORM – A Potential Game Changer
AZZ (AZZ/$93.14 | Price Target: $110) Mark Reichman mreichman@noblefcm.com | (561) 999-2272 Increasing Our FY2025 and FY2026 Estimates and Price Target Rating: OUTPERFORM
A market leader with a strong growth profile. AZZ is the leading independent provider of hot dip galvanizing and coil coating solutions to a broad range of end markets. With AZZ Precoat Metals’ new manufacturing facility in Washington, Missouri expected to be completed in fiscal year 2025, we expect the facility to contribute to top-line growth in fiscal year 2026 while capital expenditures decline. Approximately 75% of the facility’s production is already committed and could generate approximately $50 million to $60 million in revenue on an annualized basis once production is fully ramped.
Updating estimates. We have increased our FY 2025 revenue, EBITDA, and EPS estimates to $1.598 billion, $344.8 million and $5.00, respectively, from $1.584 billion, $343.0 million, and $4.95. Our estimates reflect stronger sales growth during the remainder of the year and into 2026. Our FY 2026 revenue, EBITDA, and EPS estimates have been increased to $1.673 billion, $367.4 million, and $5.60, respectively, from $1.650 billion, $361.2 million, and $5.45. We think the incoming Trump administration could support pro-growth economic policies that could favorably impact AZZ’s business. While we have not assumed any gross margin expansion during the remainder of FY 2025, gross margin increases modestly in FY 2026 to 23.8% versus our prior estimate of 23.5%.
Codere Online (CDRO/$7.75 | Price Target: $14) Michael Kupinski mkupinski@noblefcm.com | (561) 994-5734 Patrick McCann, CFA pmccann@noblefcm.com | (314) 724-6266 Q3 Beat Despite Exchange Rate Headwinds Rating: OUTPERFORM
Strong Q3 results. The company reported 20% year-over-year revenue growth in Q3 to €51.7 million. Q3 was also the company’s third consecutive quarter with positive adj. EBITDA generation, which was €1.5 million. Revenue and adj. EBITDA exceeded our estimates of €50.0 million and €0.4 million, respectively.
Exchange rate headwinds in Mexico. Revenue in Mexico grew 27%, year-over-year, despite weakness in the Mexican Peso. Notably, on a constant currency basis, revenue in Mexico was up 43%, as the company continued its focus in the country.
MustGrow Biologics Corp. (MGROF/$1.23) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | A Potential Game Changer Rating: MARKET PERFORM
Proposed Acquisition. Last week, MustGrow signed a non-binding term sheet with Univar Solutions Canada Ltd. for the proposed acquisition of NexusBioAg. The acquisition is subject to certain conditions, including due diligence, the negotiation and execution of a definitive asset purchase agreement, and approval by the TSX Venture Exchange.
Light on Details. Terms of the proposed acquisition were not disclosed. Nor was any detail regarding sales or net income for NexusBioAg. MustGrow also would need to obtain financing for the proposed deal. The purchase consideration for the proposed acquisition is anticipated to include (i) a deferred cash payment and (ii) contingent payments made in 2025 and 2026. The parties are targeting a closing by yearend.
Noble Capital Markets Research Report Wednesday, November 27, 2024
Companies contained in today’s report:
Alliance Resource Partners (ARLP)/OUTPERFORM – Increasing Longer-Term Oil and Gas Royalty Volume Expectations; Price Target Increased MustGrow Biologics Corp. (MGROF)/MARKET PERFORM – Sales are Trickling In Travelzoo (TZOO)/OUTPERFORM – Raising Price Target Traws Pharma (TRAW)/OUTPERFORM – Antiviral Pipeline Makes Progress and Moves Forward
Alliance Resource Partners (ARLP/$28.17 | Price Target: $33) Mark Reichman mreichman@noblefcm.com | (561) 999-2272 Increasing Longer-Term Oil and Gas Royalty Volume Expectations; Price Target Increased Rating: OUTPERFORM
Adjusting estimates. While our 2024 and 2025 estimates are unchanged, we have increased our 2026 through 2030 EBITDA and EPU estimates to reflect higher year-over-year growth in oil and gas royalty volumes of 12.5% compared to our previous estimate of 2.0% which we think is too conservative based on the partnership’s record. Our commodity price deck is unchanged. We have assumed an average of $75 million per year in oil and gas reserve acquisitions in 2026 through 2030. Based on our higher forward estimates and a modest 100-basis point reduction in our discount rate to 9.5%, we have increased our price target to $33 per share from $28.
Hail to the incoming chief. We expect industries associated with the fossil fuels to benefit from the upcoming change in U.S. Presidential administrations. It is our belief that the Trump Administration may seek to roll back the EPA’s carbon emissions rule which could extend the life of existing coal-fired power plants. Moreover, we think the business climate could improve based on a move toward market-based energy policies and a reduction in regulatory burden.
MustGrow Biologics Corp. (MGROF/$1.23) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | Sales are Trickling In Rating: MARKET PERFORM
3Q Results. Revenue for the quarter totaled CAD$279,182, including the Company’s CAD$272,500 in deferred revenue. Excluding this, revenue was CAD$6,682, including TerraSante sales’ impact. We estimated revenue of CAD$15,000. Net loss was CAD$1.7 million, or a loss of $0.03/sh, compared to a loss of CAD$1.9 million last year, or $0.04/sh. We estimated a net loss of CAD$1.9 million or $0.04/sh.
Sales Revenue is Here. Notably, the quarter recognized product sales revenue for the TerraSante product for the first time. We expect TerraSante revenue to begin to impact revenue in a meaningful way in the latter half of 2025. As the Company receives more approvals from different states, we believe the opportunity to showcase TerraSante to farmers can expand, along with revenue.
Moving towards enhanced growth. We believe that the company’s strategic focus on developing a subscription model will accelerate revenue and cash flow growth in 2025 and beyond. We anticipate that even a modest 1% penetration of its 30+ million members will accelerate 2025 revenue and cash flow growth to 12% and roughly 15%, respectively.
Providing revenue and cash flow stability. The subscription model is being launched Jan. 1, 2025 and is expected to offer a ballast to the company’s more cyclical advertising driven model. Notably, the company is not expected to abandon its 30 million plus members, but simply migrate a portion of those members to annual subscriptions, largely as those members seek to take advantage of the travel “deals”.
Traws Pharma (TRAW/$4.09 | Price Target: $6) Robert LeBoyer rleboyer@noblefcm.com | (212) 896-4625 Antiviral Pipeline Makes Progress and Moves Forward Rating: OUTPERFORM
Traws Has Made Significant Progress During 2024. In May 2024, Onconova and Transfynydd combined to form Traws Pharmaceuticals. The new company brought together the Transfynydd small molecules for respiratory viral diseases with the Onconova clinical-stage oncology pipeline. The company is planning Phase 2 clinical trials for its antivirals while looking for collaborations and/or partnerships for the oncology pipeline.
Phase 2 Trials Are Planned For Two Antivirals. Tivoxavir marboxil (TRX100) is a protease inhibitor of enzyme needed for the reproduction of the virus that causes seasonal and pandemic influenza. Ratutrelvir (TRX01) inhibits the protease Mpro (the main protease or 3CL), the main protease of SAR-CoV-2 (the COVID-19 virus), but does not require co-administration of a metabolic inhibitor. This avoids the risk of drug-drug interactions and potential side effects. Phase 2 studies for both drugs are expected to begin in 1H24.
Noble Capital Markets Research Report Tuesday, November 26, 2024
Companies contained in today’s report:
Aurania Resources (AUIAF)/OUTPERFORM – Increasing Financial Flexibility Ahead of the 2025 Exploration Program FAT Brands (FAT)/OUTPERFORM – Another Step
Aurania Resources (AUIAF/$0.33 | Price Target: $0.65) Mark Reichman mreichman@noblefcm.com | (561) 999-2272 Increasing Financial Flexibility Ahead of the 2025 Exploration Program Rating: OUTPERFORM
Private placement financing. Aurania intends to raise up to C$4.0 million in a private placement of up to ~8.9 million units at a price of C$0.45 per unit to fund exploration programs in France and Ecuador. Each unit will consist of one common share and one common share purchase warrant. Each warrant may be used to purchase one common share at an exercise price of C$0.75 for a period of 24 months following the closing of the offering. The private placement is expected to close in December and is contingent on the receipt of necessary approvals, including by the TSX Venture Exchange.
Concessions in Ecuador. Aurania reached an agreement with Ecuadorian authorities regarding the payment of its 2024 concession fees for its 42 mineral exploration concessions in Ecuador. Aurania has made a partial payment with the balance to be paid within the following six months, including interest associated with the outstanding amount. The concessions remain in good standing.
FAT Brands (FAT/$5.32 | Price Target: $15) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | Another Step Rating: OUTPERFORM
Step 2. FAT Brands completed the second step in its anticipated planned listing of its Twin Hospitality unit as a standalone public company. FAT successfully completed the refinancing of the whole business securitization credit facility of its Twin Peaks and Smokey Bones restaurant brands.
Details. The aggregate principal balance of the new Series 2024-1 fixed rate notes is $416.7 million across four tranches with a weighted average annual interest rate of 9.5%. The interest rate on the new notes is modestly higher than the rate on the previous securitization notes. However, the first anticipated call date goes from January 2025 to October 2027. We would point out that if the new notes are not repaid or refinanced by October 2027, additional interest equal to 5.0% per annum will accrue on each tranche of notes. The noteholders also are receiving warrants to acquire an aggregate of 5% of the Class A common stock of Twin Hospitality.
Noble Capital Markets Research Report Monday, November 25, 2024
Companies contained in today’s report:
Lifeway Foods (LWAY)/MARKET PERFORM – Another Rejection…And More
Lifeway Foods (LWAY/$24.26) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | Another Rejection…And More Rating: MARKET PERFORM
Rejected. Lifeway’s Board rejected Danone’s revised offer to acquire all of the LWAY shares it currently does not own for $27 per share. The Board stated the “revised proposal substantially undervalues Lifeway and is not in the best interests of the Company and its shareholders or other stakeholders.” Danone has yet to respond.
The Third Party. Following the rejection, Edward and Ludmila Smolyansky called for Lifeway’s Board to immediately establish an independent special committee to evaluate and negotiate a transaction with Danone or other potential buyers. In addition, Edward and Ludmila are seeking public disclosure of any valuation analysis done by Kroll when Kroll assisted the Board in June 2023 to explore strategic alternatives.
Noble Capital Markets Research Report Friday, November 22, 2024
Companies contained in today’s report:
Euroseas (ESEA)/OUTPERFORM – Third Quarter Financial Results Exceed Our Expectations; Outlook Remains Favorable Haynes International (HAYN)/NOT RATED – Acerinox Completes the Acquisition of Haynes International Hemisphere Energy (HMENF)/OUTPERFORM – Third Quarter Results Ahead of Expectations
Euroseas (ESEA/$39.45 | Price Target: $68) Mark Reichman mreichman@noblefcm.com | (561) 999-2272 Hans Baldau hbaldau@noblefcm.com | Third Quarter Financial Results Exceed Our Expectations; Outlook Remains Favorable Rating: OUTPERFORM
Third quarter results. Euroseas Ltd. reported adjusted EBITDA and earnings per share of $36.1 million and $3.92, respectively, exceeding our estimates of $35.1 million and $3.77. Net revenues increased 6.9% on a year-over-year basis, and total daily vessel operating expenses decreased on a per-day per-vessel basis from $7,692 to $7,249. The revenue growth is mainly driven by a larger fleet, while the decrease in daily operating expenses is due to the company’s newly built vessels requiring less maintenance.
Favorable outlook. Charter and freight rates have rebounded after a slight dip during the summer and are expected to remain elevated throughout 2024 and into 2025. Ongoing disruptions in the Red Sea continue to support rates. The supply of new vessels in 2025 is anticipated to be lower than in the previous two years but could still put downward pressure on rates. Potential regulations regarding vessel speeds to reduce emissions could be implemented in 2025, which may help alleviate the downward rate pressure from the increasing supply. Furthermore, charter rates for eco-friendly vessels are projected to rise as emission regulations become more stringent and market demand for these types of vessels increases.
Haynes International (HAYN/$60.99) Mark Reichman mreichman@noblefcm.com | (561) 999-2272 Acerinox Completes the Acquisition of Haynes International Rating: NOT RATED
Acquisition by North American Stainless. In February, Haynes International entered into an agreement to be acquired by North American Stainless, a wholly owned subsidiary of Acerinox. The transaction closed on November 21, 2024. We think the transaction is a positive outcome for Haynes’ various stakeholders.
Strategic benefits. Together, Haynes and VDM Metals will form Acerinox’s High-Performance Alloys Division. The integration of Haynes will support Acerinox’s strategic priorities, including the company’s focus on enhancing its operations in the U.S. market, high-performance alloys, and the aerospace sector. North American Stainless acquired all of the outstanding shares of Haynes for $61 per share in an all-cash transaction.
Hemisphere Energy (HMENF/$1.38 | Price Target: $2.2) Mark Reichman mreichman@noblefcm.com | (561) 999-2272 Third Quarter Results Ahead of Expectations Rating: OUTPERFORM
Third quarter financial results. Hemisphere Energy reported third-quarter net income of C$8.6 million or C$0.09 per share compared to C$8.5 million or C$0.08 per share during the third quarter of 2023. We had projected net income of C$8.4 million or C$0.08 per share. Year-over-year, oil and natural gas revenue increased 9.6% to C$26.7 million, driven by an 18.5% increase in average daily production to 3,621 barrels of oil equivalent (BOE) compared to 3,056 during the prior year period and our estimate of 3,600. The average sales price per BOE declined to C$80.06 compared to C$86.57 in the third quarter of 2023. Adjusted funds flow from operations amounted to C$11.7 million or C$0.12 per diluted share compared to C$11.7 million or C$0.11 per diluted share during the prior year period.
Updating estimates. While our 2024 EPS estimate is unchanged at C$0.31, we have modestly lowered our adjusted funds flow estimate to C$43.5 million from C$43.8 million. We lowered our full year average daily production expectations to 3,456 barrels of oil equivalent from 3,534 to reflect down time in the fourth quarter associated with vessel inspections and maintenance. While our 2025 average daily production estimate of 3,625 barrels of oil equivalent is unchanged, we lowered our 2025 AFF and EPS estimates to C$38.0 million and C$0.27 per share from C$42.6 million and C$0.32 to reflect lower crude oil prices.
Noble Capital Markets Research Report Thursday, November 21, 2024
Companies contained in today’s report:
Century Lithium Corp. (CYDVF)/OUTPERFORM – Building on a Successful 2024 Codere Online (CDRO)/OUTPERFORM – Q3 Preview: Expecting a Strong Quarter
Century Lithium Corp. (CYDVF/$0.19 | Price Target: $2.35) Mark Reichman mreichman@noblefcm.com | (561) 999-2272 Building on a Successful 2024 Rating: OUTPERFORM
Closing out a productive year. Century Lithium had a productive year in 2024 with the two most significant achievements being completion of the feasibility study on the Angel Island lithium project and producing battery-grade lithium carbonate at its pilot plant. The feasibility study was released in April and while the economics were compelling, the company continues to focus on process optimization to improve potential returns by reducing the project’s estimated capital and operating costs. The use of a Chlor-alkali plant is unique and offers technical and environmental advantages by producing reagents for use onsite and producing surplus sodium hydroxide which can be sold to offset cash operating costs.
Environmental and regulatory permitting. On the environmental and permitting front, most of the required baseline studies have been completed and the company is editing a draft Plan of Operations and preparing key state permits for pollution and water quality compliance. Once the Plan of Operations is completed, the company may initiate the National Environmental Policy Act (NEPA) permitting process.
Codere Online (CDRO/$7.3 | Price Target: $14) Michael Kupinski mkupinski@noblefcm.com | (561) 994-5734 Patrick McCann, CFA pmccann@noblefcm.com | (314) 724-6266 Q3 Preview: Expecting a Strong Quarter Rating: OUTPERFORM
Positive upside. The company is expected to report Q3 results within the next 2 weeks. We are re-iterating our Q3 estimates of $50.0 million in revenue and $0.4 million in adj. EBITDA. Moreover, we believe there could be upside to our revenue estimate, which may be conservative.
Peso headwind. We expect solid results in Spain, bolstered by the rollback in marketing restrictions in the country. As for the company’s other core market, Mexico, trends appear to be strong. Weakness in the Peso, however, has presented a headwind for the company, which reports in Euros. Nonetheless, we expect a strong quarter, currency exchange concerns notwithstanding.
Noble Capital Markets Research Report Wednesday, November 20, 2024
Companies contained in today’s report:
EuroDry (EDRY)/OUTPERFORM – Third Quarter Performance Falls Short Amid a Weak Market GeoVax Labs (GOVX)/OUTPERFORM – Interim Analysis Shows CM04S1 Outperforms mRNA Vaccines Kelly Services (KELYA)/OUTPERFORM – Enhancing Education through Children’s Therapy Center Acquisition Ocugen (OCGN)/OUTPERFORM – Interim Data From The Clinical Showcase Highlighted QuoteMedia Inc. (QMCI)/OUTPERFORM – Working Through A Rough Patch
EuroDry (EDRY/$14.96 | Price Target: $20) Mark Reichman mreichman@noblefcm.com | (561) 999-2272 Hans Baldau hbaldau@noblefcm.com | Third Quarter Performance Falls Short Amid a Weak Market Rating: OUTPERFORM
Third quarter financial results. Eurodry Ltd. reported an adjusted third-quarter net loss to controlling shareholders of $3.9 million or ($1.42) per share compared to an adjusted net loss of $675 thousand or ($0.24) per share during the prior year period. Adjusted EBITDA declined to $474 thousand compared to $3.1 million during the prior year period. The year-over-year decline was driven by a heavier-than-expected dry-docking quarter, a decline in charter rates due to a weakening Chinese economy and the reopening of trade routes.
Updating 2024 and 2025 estimates. We have lowered our 2024 adjusted EBITDA and earnings per share estimates to $14.7 million and $(2.46), respectively, from $23.0 million and ($0.85). Similarly, we have lowered our 2025 adjusted EBITDA and earnings per share to $30.8 million and $3.28, respectively, from $37.3 million and $5.65. Our revisions are primarily the result of a weak market outlook and corresponding rates.
CM04S1 Continues In Phase 2 As DSMB Determines mRNA Vaccine Arm Failed Primary Endpoint. CM04S1 is in Phase 2 testing as a COVID-19 booster against an approved mRNA vaccine in patients with chronic lymphocytic leukemia (CLL). An interim analysis conducted by an independent Data Safety Monitoring and Review Board (DSMB) determined that the mRNA arm did not meet its specified primary endpoint, but the trial will continue with the CM04S1 arm.
Study Tests CM04S1 In Immunocompromised Patients. The Phase 2 study enrolled patients that are immunocompromised due to CLL and its therapies, which often leaves them unable to mount a sufficient immune response and vulnerable to COVID-19 infection. The trial was designed to determine the immune response with Pfizer’s mRNA vaccine as the control and comparator arm. Patients were randomized at 1:1 into two arms, receiving either two injections of CM04S1 three months apart or the mRNA vaccine.
Kelly Services (KELYA/$14.16 | Price Target: $27) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | Enhancing Education through Children’s Therapy Center Acquisition Rating: OUTPERFORM
Adding On. Expanding on the Company’s Pediatric Therapy Services (PTS) portfolio in the Education segment, yesterday Kelly announced the acquisition of Children’s Therapy Center (CTC). Notably, the acquisition increases the current network’s scale of licensed therapists to Kelly, enabling practice flexibility between clinics and schools. The terms of the acquisition were not disclosed, but we do not believe it will impact fourth quarter results.
CTC Overview. Headquartered in Eagan, Minnesota, CTC specializes in occupational, physical, and speech therapy for children from birth to 18 years old. The company was founded in 1999 and has two office locations, one in Eagan and the other in Apple Valley, MN. Various disorders that are treated through CTC include motor or speech delays, sensory processing disorders, Cerebral Palsy, Autism Spectrum Disorders, and Attention Deficit Disorder.
Ocugen (OCGN/$0.8736 | Price Target: $8) Robert LeBoyer rleboyer@noblefcm.com | (212) 896-4625 Interim Data From The Clinical Showcase Highlighted Rating: OUTPERFORM
Summary Of Data Announced For Products In Clinical Trials. Ocugen summarized some of the major points presented at its Clinical Showcase on November 12. As discussed in our Research Note on November 13, speakers reviewed the products’ mechanisms of action, reviewed OCU400 data from the Phase 1/2 trial, the design of the OCU400 Phase 3 liMeliGhT trial, and presented new interim data from the Phase 1/2 ArMaDa trial for OCU410.
Mechanism of Action For The Modifier Gene Therapy (MGT) Detailed. Ocugen is developing gene therapies for retinal diseases that deliver a regulatory gene to control other genes and regulate downstream pathways. Products in development are for inherited diseases that result from multiple gene mutations or conditions that result from several dysfunctional pathways.
QuoteMedia Inc. (QMCI/$0.2 | Price Target: $0.26) Michael Kupinski mkupinski@noblefcm.com | (561) 994-5734 Jacob Mutchler jmutchler@noblefcm.com | Working Through A Rough Patch Rating: OUTPERFORM
In-line results. The company reported Q3 revenue of $4.7 million, a decrease of 1.4% from the prior year period and largely in line with our estimate of $4.8 million. Q3 adj. EBITDA of $0.4 million, was modestly lighter than our estimate of $0.7 million, as illustrated in Figure #1 Q3 Results. The adj. EBITDA miss was driven by a modestly higher cost of revenue and increased sales headcount.
Lackluster near term outlook. Management indicated that Q4 revenue will be relatively flat compared to Q3 despite a solid business pipeline. Management highlighted that it lost a significant client and that some of its clients are experiencing financial hardship, leading to a lower volume and higher bad debt expenses. We believe the company should be able to offset lower volume and the loss of clients with its building business pipeline.
Noble Capital Markets Research Report Tuesday, November 19, 2024
Companies contained in today’s report:
Bit Digital (BTBT)/OUTPERFORM – Results Below Expectations, but Pipeline Being Realized Comtech Telecommunications (CMTL)/MARKET PERFORM – Agreement Made with Dissident Former CEOs GDEV Inc (GDEV)/OUTPERFORM – Raising Adj. EBITDA Estimates
Bit Digital (BTBT/$4.02 | Price Target: $5.5) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | Results Below Expectations, but Pipeline Being Realized Rating: OUTPERFORM
3Q Results. Revenue of $22.7 million was lower than our and consensus estimate of $23.2 million and $25.9 million, respectively. The BTC halving resulted in lower revenue. Higher electricity costs, D&A, G&A, and a loss of $21.9 million on digital assets led to the reduced net loss of $38.8 million, or $0.26/sh, from our consensus estimate of a loss of $2.3 million, or $0.02/sh, and loss of $2.9 million, or $0.02/sh, respectively. Adjusted EBITDA was a negative $21.8 million compared to a negative $2.9 million last year.
Seizing Opportunity. After 3Q ended, Bit Digital entered into one term sheet agreement and two Master Services Agreements. Together, the three provide roughly $21 million in annual revenue once servers are fully deployed. Alongside this is the Boosteroid agreement, as management expects that to reach approximately 20% of the $700 million opportunity, or 10,000 GPUs, through the course of 2025, translating to $30 million of revenue annually.
Comtech Telecommunications (CMTL/$2.65) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | Agreement Made with Dissident Former CEOs Rating: MARKET PERFORM
Agreement Made. Yesterday, Comtech announced it entered into a cooperation agreement with former CEOs Michael Porcelain and Fred Kornberg, along with Oleg Timoshenko (the “Investor Group”), to appoint Michael Hildebrandt to the Board of Directors. Mr. Hildebrandt was one of the nominees chosen by the Investor Group to be appointed to the Board in a 13D filing through the SEC in September 2024.
Mr. Porcelain on as Advisor. Along with the appointment of Mr. Hildebrandt, Mr. Porcelain is authorized as an advisor to the Company. He will be entitled to periodically engage in discussions with the Company and provide advice or recommendations. We believe adding Mr. Porcelain as an advisor is a positive as the former CEO has a wealth of knowledge on the Company’s end markets and its processes.
Solid Q3 results. Total company revenue was $110.7 million, which beat our $103.0 million estimate by 7.4%, and adj. EBITDA of $16.9 million, substantially exceeded our estimate of $4.9 million. The adj. EBITDA beat was largely attributed to the revenue upside and modestly lower game operating and marketing expenses. The strong operating results also beat Street estimates, with consensus adj. EBITDA of $8.5 million.
Attractive outlook. While revenue outperformed our expectations, bookings were lower than expected. Management highlighted its focus on player retention and quality of play rather than short term monetization of its user base. Given that active users were down roughly 16% from the prior year period, we view the company’s focus on player retention and improving gameplay favorably.
Noble Capital Markets Research Report Monday, November 18, 2024
Companies contained in today’s report:
Haynes International (HAYN)/MARKET PERFORM – Acquisition by North American Stainless Expected to Close Shortly Maple Gold Mines (MGMLF)/OUTPERFORM – Recent Private Placement Provides Flexibility to Pursue a Robust Exploration Program
Haynes International (HAYN/$60.93) Mark Reichman mreichman@noblefcm.com | (561) 999-2272 Acquisition by North American Stainless Expected to Close Shortly Rating: MARKET PERFORM
Acquisition by North American Stainless. In February, Haynes International entered into an agreement to be acquired by North American Stainless, a wholly owned subsidiary of Acerinox. North American Stainless will acquire all the outstanding shares of Haynes for $61.00 per share. The merger is conditioned on, among other things, the receipt of the approvals, clearances, or expirations of waiting periods under certain regulatory laws.
Receipt of all regulatory approvals and clearances. With the Austria waiting period expiration on November 15, all regulatory approvals and clearances where the applicable authorities have asserted jurisdiction have been obtained, including in the United States and in the United Kingdom.
Maple Gold Mines (MGMLF/$0.04 | Price Target: $0.25) Mark Reichman mreichman@noblefcm.com | (561) 999-2272 Recent Private Placement Provides Flexibility to Pursue a Robust Exploration Program Rating: OUTPERFORM
Private placement financing. On November 14, Maple Gold Mines closed a private placement of 32,695,384 non-flow-through (NFT) units at a price of C$0.065 per NFT unit and 35,935,000 flow-through (FT) common shares of the company at a price of C$0.08 per FT share for total gross proceeds of C$5 million. Each NFT unit consists of one common share and one-half of one common share purchase warrant. Each warrant entitles the holder to acquire one non-flow-through common share at a price per warrant share of C$0.10 until November 14, 2027.
Third quarter financial results. As an advanced exploration and development company, Maple Gold does not generate revenues and incurs expenses associated with advancing its projects. Maple Gold generated a third quarter loss of C$1.3 million or C$(0.00) per share compared to a loss of C$1.1 million or $(0.00) per share during the prior year period. We had anticipated a loss of C$1.5 million or C$(0.00) per share.
Noble Capital Markets Research Report Friday, November 15, 2024
Companies contained in today’s report:
Comtech Telecommunications (CMTL)/MARKET PERFORM – New Contract Awarded Conduent Inc (CNDT)/OUTPERFORM – Lowering Forecast, Business Transformation Plan Still on Track InPlay Oil (IPOOF)/OUTPERFORM – Expecting a Strong Finish in 2024; Outlook for 2025 Remains Positive Lifeway Foods (LWAY)/MARKET PERFORM – Year-over-Year Growth, But Below Our Expectations PDS Biotechnology (PDSB)/OUTPERFORM – 3Q24 Reported With Phase 3 VERSATILE-003 Trial Expected To Begin In 1Q25 ZyVersa Therapeutics, Inc. (ZVSA)/OUTPERFORM – Reported 3Q24 With Clinical Trials Beginning In 2025
Comtech Telecommunications (CMTL/$2.71) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | New Contract Awarded Rating: MARKET PERFORM
New Navy Contract. Comtech has been awarded a sole source contract from the U.S. Navy Information Warfare Systems Command for the Company’s U.S sovereign software-defined SLM-5650B satellite communications (“SATCOM”) modems, upgrade kits, firmware options and technical support. The contract is for a four-year period and valued at $50 million with roughly $2 million of funded orders received to date.
Growing Market. Comtech’s new award is indicative of the growing satellite industry, as the satellite ground station market is projected to grow to $6.6 trillion by 2028, representing a 6.89% CAGR beginning in 2024. Various government departments, such as the Department of Defense are needing agile and distributed communications systems for keeping communication open and uninterrupted, producing demand for products such as Comtech’s SATCOM modems. Furthermore, budgets for next year show growth, with an example being the U.S. Space Force from $17 billion in 2022 to a projected $30 billion in 2025. With a growing industry over the next few years and potential growing budgets, we believe that Comtech has the capability of capturing additional contracts.
Conduent Inc (CNDT/$4.05 | Price Target: $7) Patrick McCann, CFA pmccann@noblefcm.com | (314) 724-6266 Michael Kupinski mkupinski@noblefcm.com | (561) 994-5734 Lowering Forecast, Business Transformation Plan Still on Track Rating: OUTPERFORM
Q3 in line. The company reported a Q3 revenue of $807 million, largely in line with our estimate of $814 million. Adj. EBITDA was $36 million, better than our estimate of $24 million. Notably, it appears that there could be tailwinds developing in the company’s Commercial segment.
Positive trends in Commercial. Adj. revenue in the Commercial segment was down 3%, due to lower volumes. However, management indicated that new business signings helped to mitigate the weakness from lost business. Moreover, it appears that momentum from new business signings is beginning to outpace lost business that is rolling off.
InPlay Oil (IPOOF/$1.3 | Price Target: $5.25) Mark Reichman mreichman@noblefcm.com | (561) 999-2272 Hans Baldau hbaldau@noblefcm.com | Expecting a Strong Finish in 2024; Outlook for 2025 Remains Positive Rating: OUTPERFORM
Third quarter financial results. InPlay Oil generated third quarter net income of C$146 thousand or C$0.00 per share compared to C$9.2 million or C$0.08 per share during the prior year period. We had predicted net income in the amount of C$423 thousand or C$0.00 per share. Average quarterly production declined to 8,206 barrels of oil equivalents per day (boe/d) compared to 9,003 boe/d in the third quarter of 2023 and our estimate of 8,238 boe/d.
Corporate 2024 guidance. While InPlay has maintained its production guidance of 8,700 to 9,000 boe/d, commodity price expectations were lowered, and operating expenses are expected to be in the range of C$13.50 to C$15.50 per boe/d compared to prior guidance of C$13.00 to C$15.25 per boe/d. Capital expenditures are expected to total $63 million compared with prior guidance of C$64 million to C$67 million. Adjusted funds flow is expected to be in the range of C$70 million to C$73 million compared to previous expectations of C$80 million to C$85 million.
Lifeway Foods (LWAY/$22.39) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | Year-over-Year Growth, But Below Our Expectations Rating: MARKET PERFORM
Another Quarter of Y-o-Y Growth. For the 20th consecutive quarter, Lifeway reported y-o-y top line growth. Revenue for the quarter totaled $46.1 million, compared to the prior year’s $40.9 million, We were a little more aggressive in our forecast, projecting revenue of $51.5 million. Gross margin of 25.7% was below the prior year’s 27.2%. Net income was $3.0 million, or $0.19 per diluted share, compared to $3.4 million, or $0.23/sh, and our estimate of $4.2 million or $0.27/sh.
Expanded Distribution. Management noted that the Company expanded its kefir distribution to South Africa in September and recently announced that it is expanding into Dubai and the Emirates market. In South Africa, the products are available on shelves now, while product availability in the Emirates is expected in the fourth quarter. We believe the Company will continue to look for new potential markets to expand its presence in stores while also expanding on its advertising in these new markets to attract the attention of new consumers.
PDS Biotechnology (PDSB/$2.25 | Price Target: $17) Robert LeBoyer rleboyer@noblefcm.com | (212) 896-4625 3Q24 Reported With Phase 3 VERSATILE-003 Trial Expected To Begin In 1Q25 Rating: OUTPERFORM
Progress Toward Phase 3 With New Phase 2 VERSATILE-002 Data. PDS Biotech Reported 3Q24 loss of $10.7 million or $(0.29) per share, a slightly lower loss than we estimated. Earlier this week, modifications to the IND protocol for the Phase 3 VERSATILE-003 trial were submitted to the FDA. Approval is expected by mid-December, which would allow the trial to begin in early 2025.
New Phase 2 VERSATILE-002 Data Analysis Shows Outcomes Were Maintained Or Improved. As additional patients complete their follow-up periods, further analysis of the data has shown improvements over the previous interim reports. The overall survival has been unchanged at 30.0 months, although the lower limit of the confidence interval has increased to 20 months. This compares with 17.9 months for published Keytruda studies. Overall response rate, complete response rate, and disease control rates have improved as well.
ZyVersa Therapeutics, Inc. (ZVSA/$1.13 | Price Target: $20) Robert LeBoyer rleboyer@noblefcm.com | (212) 896-4625 Reported 3Q24 With Clinical Trials Beginning In 2025 Rating: OUTPERFORM
3Q24 Reported With Product Updates. ZyVersa reported a loss of $2.4 million or $(2.43) per share and updated its clinical trial plans for the two products in development. During the quarter, several scientific papers were published showing the role of inflammation in obesity, diabetes, and neurodegeneration. These studies all support previous work by the company and are consistent with the mechanism of action for IC 100.
VAR 200 To Start Phase 2a In Diabetic Kidney Disease. The Cholesterol Efflux Mediator™ VAR 200 has shown reductions in the initial damage that starts a cycle of damage and repair that leads to progressive scarring and loss of kidney function. A Phase 2a trial enrolling patients with diabetic kidney disease (DKD) is expected to begin in 1Q25 with initial data announcement around mid-2025.
Noble Capital Markets Research Report Thursday, November 14, 2024
Companies contained in today’s report:
Bitcoin Depot (BTM)/OUTPERFORM – Building Momentum Ahead of 2025 Cocrystal Pharma (COCP)/OUTPERFORM – 3Q24 Reported With Data Announcements Ahead DLH Holdings (DLHC)/OUTPERFORM – A More Flexible Credit Facility Snail (SNAL)/OUTPERFORM – Clearing Up The Noise Unicycive Therapeutics (UNCY)/OUTPERFORM – 3Q24 Reported With Progress Driven By OLC
Bitcoin Depot (BTM/$2.48 | Price Target: $7) Patrick McCann, CFA pmccann@noblefcm.com | (314) 724-6266 Michael Kupinski mkupinski@noblefcm.com | (561) 994-5734 Building Momentum Ahead of 2025 Rating: OUTPERFORM
Q3 beat. The company reported solid Q3 results, beating our estimates on both revenue and adj. EBITDA. Q3 revenue was $135.3 million, better than our estimate of $130.6 million and adj. EBITDA was $9.2 million, better than our estimate of $7.8 million.
Kiosk re-deployment paying off. After focusing on re-deploying underperforming kiosks during 2023 and in the first half of 2024, the company’s kiosks appear to be gaining traction. This is evident in the median transaction size, which climbed from roughly $200 in the beginning of the year to $250 in Q3. Notably, it takes time for re-deployed kiosks to be discovered by potential users. As a result, newly deployed kiosks tend to have an initial drag on profitability.
Cocrystal Pharma (COCP/$1.77 | Price Target: $10) Robert LeBoyer rleboyer@noblefcm.com | (212) 896-4625 3Q24 Reported With Data Announcements Ahead Rating: OUTPERFORM
Two Trials Expected To Report Data Shortly. Cocrystal reported a 3Q24 loss of $4.9 million or $(0.49) per share. The company made progress in its clinical programs during the quarter, including CC42344, its oral PB2 inhibitor for seasonal and pandemic influenza. We see this an increasingly important product, given the spread of a new variant of the virus known as H5N1, or the avian flu. Data from its Phase 2a human challenge study is expected before year-end.
CC-42344 Could Be Effective Against The New Bird Flu. As discussed in our Research Note on June 21, a new virulent strain of influenza known as avian flu (H5N1) had been detected in dairy cattle. Earlier this year, the first infections in dairy workers showed the virus had mutated enough to begin infecting humans. Preclinical testing with CC-42344 showed it was able to inhibit the virus and has potential for human use against the strain.
DLH Holdings (DLHC/$8.76 | Price Target: $15) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | A More Flexible Credit Facility Rating: OUTPERFORM
Credit Facility and CMOP Update. Yesterday, DLH announced the Company has amended its credit facility with lenders to modify the borrowing capacity of the facility itself and the financial covenants of the agreement. The credit facility’s maximum capacity is reduced from $70 million to $50 million with the amendment, although no changes were made to the maturity or pricing terms. We would point out that DLH also is expected to transition a portion of its CMOP locations to set-aside, small business contractors, although no further details were given.
Financial Covenants. As for the financial covenants of the agreement, the two that are specifically being changed are the Total Leverage ratio and Fixed Charge Coverage ratio. Importantly, the amendment increases the maximum threshold of the Total Leverage Ratio, with the most recent being to 4.5 to 1.0 in the first quarter next year from a prior 4.25 to 1.00. As for the Fixed Charge Coverage ratio, the minimum threshold is being lowered with the most recent staying the same at less than to 1.25 to 1.00 in the first quarter next year but lowering in subsequent quarters. While the reduction of the capacity of the facility is not ideal, we believe the changes to the covenants provides DLH flexibility in anticipation of the Company’s CMOP locations being moved to small businesses, impacting performance.
Q3 results. The company reported revenue of $22.5 million, largely in line with our estimate of $25.0 million, and Adj. EBITDA of $0.5 million, below our estimate of $4.0 million. Notably, results benefitted from the Aberration DLC release that was included in the sale of Ark: Survival Ascended (ASA), and part 2 of Bobs Tall Tales. Importantly, the adj. EBITDA miss was a largely a function of lower revenue, given the amount of fixed licensing expenses in its cost structure.
DLC release outlook. With the release of the Aberration DLC in September, there are three DLC packages that were included in the sale of ASA that have yet to be released. The next DLC is expected in Q4 and two more are expected in 2025. Importantly, as DLC packages included in ASA are released, the company will defer less revenue from ASA sales, which should provide investors with a clearer picture of company operating results.
Unicycive Therapeutics (UNCY/$0.47 | Price Target: $7) Robert LeBoyer rleboyer@noblefcm.com | (212) 896-4625 3Q24 Reported With Progress Driven By OLC Rating: OUTPERFORM
OLC Achieved Significant Milestones In 3Q24. Unicycive reported a 3Q24 loss of $4.1 million or $(0.05) per share. During the quarter, the NDA was submitted for approval of oxylanthanum carbonate (OLC), its phosphate binder for patients on renal dialysis. After the close of the quarter, the acceptance for filing was announced with a PDUFA date of June 28, 2025. The quarter ended with $32.3 million in cash, which we believe is sufficient to fund operations and launch of OLC in 2025-26.
NDA Submission Was Completed As Expected. In early September, Unicycive submitted the new drug application (NDA) for OLC, its phosphate binder for patients on renal dialysis. On November 11, the company announced FDA acceptance of the application for review and assigned a PDUFA date of June 28, 2025. This is the statutory date for the FDA to answer the application with Market Approval or a denial known as a Complete Response Letter (CRL).
Noble Capital Markets Research Report Wednesday, November 13, 2024
Companies contained in today’s report:
Aurania Resources (AUIAF)/OUTPERFORM – Black Sands Beach Project in Corsica is Taking Shape Direct Digital Holdings (DRCT)/MARKET PERFORM – Building Back Better FreightCar America (RAIL)/OUTPERFORM – Stock Price Decline May Offer an Attractive Entry Point for Investors GeoVax Labs (GOVX)/OUTPERFORM – 3Q24 Reported With Continued Flow Of Good News Ocugen (OCGN)/OUTPERFORM – Ocugen Clinical Showcase Highlights Fundamentals, Clinical Data, and Patient Stories SKYX Platforms (SKYX)/OUTPERFORM – Seeding Future Revenue Growth V2X (VVX)/OUTPERFORM – AIP Selling More Shares
Aurania Resources (AUIAF/$0.37 | Price Target: $0.65) Mark Reichman mreichman@noblefcm.com | (561) 999-2272 Black Sands Beach Project in Corsica is Taking Shape Rating: OUTPERFORM
New assay results. Aurania received preliminary results from studies conducted by SGS Laboratories on a sample of magnetic sand taken from Nonza Beach, Corsica. The nickel-bearing mineral in the black magnetic sand is indeed awaruite, a natural nickel-iron alloy. SGS was able to isolate a nearly pure awaruite concentrate from the magnetic sand using a combination of grinding and flotation. New assays of awaruite flotation concentrate yielded 71.4% nickel, 0.98% cobalt, 0.65% copper, 0.58 grams of gold per tonne, 0.09 grams of platinum per tonne, and 0.39 grams of palladium per tonne. The flotation method recovered 83.8% of the nickel contained in the magnetic sand, which had a head grade of 6% nickel. Studies of identical sands at nearby Albo Beach are underway.
Extraction and processing. Aurania hired IHC Mining Advisory Services (IMAS) to identify the best means to extract and recover the black beach sands at Albo-Nonza. IHC proposed two different scenarios focused on the extraction of heavy minerals containing nickel and iron. The preferred scenario uses a floating suction and cutter-head dredge on floating pontoons. IMAS estimated the capital cost of the cutter suction dredger scenario to be €13 million, including €7.8 million for the dredging equipment and €5.2 million for a processing plant.
Direct Digital Holdings (DRCT/$2.64) Michael Kupinski mkupinski@noblefcm.com | (561) 994-5734 Jacob Mutchler jmutchler@noblefcm.com | Building Back Better Rating: MARKET PERFORM
Weak Q3 Results, likely the trough. Q3 revenues declined 85% to $9.1 million, with a decline in both its Buy-side and Sell-side businesses, down 12% and 96%, respectively. Adj. EBITDA was a negative $2.8 million. Management blamed the weak fundamentals on a business disruption caused by a “false and disproven” blog post by Adalytics, which it sued for defamation. Notably, the Q3 results puts the company back on track on its financial reporting under its new auditor BDO.
Guidance anticipates a strong revenue rebuild. Management anticipates rebound in revenues as one of its largest clients rebuilds volume. We expect strong sequential Q4 revenue to $14.5 million, up from $9.1 million in Q3. Full year 2024 revenue is expected to be $67.7 million, with full year 2024 adj. EBITDA loss of $8.6 million. Management anticipates strong full year 2025 revenue growth to a range of $90 million to $110 million.
FreightCar America (RAIL/$10.17 | Price Target: $14.75) Mark Reichman mreichman@noblefcm.com | (561) 999-2272 Stock Price Decline May Offer an Attractive Entry Point for Investors Rating: OUTPERFORM
Third quarter financial results. FreightCar America generated third quarter adjusted net income to common stockholders of $2.455 million or $0.08 per share compared to $3.953 million or $0.13 per share during the prior year period. We had anticipated adjusted net income to common stockholders of $2.465 million or $0.07 per share. Average shares outstanding of 31.4 million were lower than our estimate of 34.5 million. Revenue and rail car deliveries increased to $113.3 million and 961, respectively, compared to $61.9 million and 503 during the third quarter of 2023. On a year-over-year basis, adjusted EBITDA increased to $10.9 million compared to $3.5 million during the prior year period and our estimate of $9.8 million. Free cash flow amounted to $5.7 million.
Full year 2024 corporate guidance. While guidance for revenue and rail car deliveries is unchanged, management narrowed its guidance range for EBITDA to $37.0 million to $39.0 million compared to previous expectations of $35.0 million to $39.0 million.
GeoVax Labs (GOVX/$3.25 | Price Target: $10) Robert LeBoyer rleboyer@noblefcm.com | (212) 896-4625 3Q24 Reported With Continued Flow Of Good News Rating: OUTPERFORM
3Q24 Report Reviews Progress During The Quarter. GeoVax reported a loss of $5.8 million or $(0.91) per share. The quarter included first revenues from its BARDA contract for the Project NextGen Phase 2b trial testing CM04S1 as a preventive vaccine for COVID-19. The company gave updates and data timeframes for clinical trials with CM04S1, MVA, and Gedeptin. During the quarter, it raised $13.5 million and ended with a cash balance of $8.6 million on September 30, 2024.
Gedeptin Trial Design Announced. GeoVax announced that the Phase 2 trial in head and neck squamous cell carcinoma (HNSCC) will test Gedeptin in combination with an immune checkpoint inhibitor (ICI) in recurrent patients before surgery. A single-cycle of Gedeptin will be given with a standard dose of Keytruda (pembrolizumab), followed by a second cycle of Keytruda alone, then surgery. Endpoints will include standard measures of response, tumor shrinkage, and survival that would make the data comparable to other treatments. The trial is expected to begin in 1H25.
Ocugen Held A Meeting With Scientists, Doctors, and Patients. On November 12, Ocugen held a Clinical Showcase meeting to present the scientific basis of its Gene Modifier technology, interim data updates from its clinical trials, and allow patients to discuss their experiences with the treatments.
First OCU410 Data Shows Efficacy. The Phase 2 ArMaDa trial is testing OCU410 in Geographic Atrophy (GA), a lesion in patients with dry age-related macular degeneration that leads to blindness. The presentations included its four mechanisms of action and the clinical outcomes from the initial patient cohorts in the dose-escalation stage of the trial. These data at 6 months compare favorably to approved complement inhibitors for GA.
SKYX Platforms (SKYX/$1.26 | Price Target: $5) Patrick McCann, CFA pmccann@noblefcm.com | (314) 724-6266 Michael Kupinski mkupinski@noblefcm.com | (561) 994-5734 Seeding Future Revenue Growth Rating: OUTPERFORM
Q3 results. The company reported Q3 revenue of $22.2 million and an adj. EBITDA loss of $2.6 million. While the revenue was slightly below our estimate of $24.1 million, the adj. EBITDA loss was milder than our estimate of $3.4 million.
Gaining traction with Home Depot. Since announcing the partnership in July, the company’s presence in Home Depot locations has expanded to 100 stores. Additionally, SKYX products are available on Home Depot’s website. We anticipate more SKUs to become available both online and in stores soon, as a wide variety of SKYX products are expected to arrive from the company’s manufacturing partner, Ruee Appliances.
V2X (VVX/$67.69 | Price Target: $72) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | AIP Selling More Shares Rating: OUTPERFORM
Round 2. American Industrial Partners (AIP) is selling another trance of VVX shares, this time 2.5 million shares with up to an additional 375,000 shares to be sold. As we noted in AIP September’s stock sale, we had expected AIP eventually to begin to sell off its stake, so we are not surprised with this additional sale. V2X will not receive any proceeds from the sale. The additional float is a positive for investors, in our view.
Ownership. Upon the completion of this offering, investment funds affiliated with AIP will beneficially own approximately 44.9% of V2X’s outstanding common stock, or 14,167,286 shares (or approximately 43.7% if the underwriters exercise their option to purchase additional shares in full).
Noble Capital Markets Research Report Monday, November 11, 2024
Companies contained in today’s report:
Bowlero (BOWL)/OUTPERFORM – Developing More Legs To Its Growth Story Graham Corp (GHM)/OUTPERFORM – Strong 2Q25 Results; Raising PT to $45 Gray Television (GTN)/OUTPERFORM – An Uncharacteristic Miss Information Services Group (III)/OUTPERFORM – Building Up for Growth in 2025 Kratos Defense & Security (KTOS)/OUTPERFORM – Reports 3Q24 Results; Raising PT to $30 Ocugen (OCGN)/OUTPERFORM – 2Q24 Reported As We Look Forward To Clinical Showcase Data The GEO Group (GEO)/MARKET PERFORM – Moving to Market Perform as Shares Skyrocket Zomedica Corp. (ZOM)/OUTPERFORM – Improving Pet Health and Veterinary Practices – Initiating Coverage With An Outperform Rating
Bowlero (BOWL/$11.5 | Price Target: $17.5) Michael Kupinski mkupinski@noblefcm.com | (561) 994-5734 Jacob Mutchler jmutchler@noblefcm.com | Developing More Legs To Its Growth Story Rating: OUTPERFORM
Solid start. The company reported fiscal Q1 results that were better than expectations. Notably, revenue increased 14.4% from the prior year period to $260.2 million, and adj. EBITDA of $62.9 million grew 20.7% from the prior year period. The favorable results were driven by strategic initiatives in the Food & Beverage segment and the inclusion of Raging Waves operating results in the quarter. Furthermore, we believe the results are indicative of positive operating momentum, which could see enhanced growth prospects from M&A activity.
Food & Beverage leads. The company’s Food & Beverage segment revenue increased by 17.5% from the prior year period and catalyzed the strong quarter. Notably, management highlighted that the increase in Food & Beverage revenue was due to its strategic efforts, not price increases. Furthermore, there appears to be room for growth through enhanced menu options.
Graham Corp (GHM/$39.07 | Price Target: $45) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | Strong 2Q25 Results; Raising PT to $45 Rating: OUTPERFORM
2Q25 Results. Graham’s 2Q25 results exceeded expectations. The Company reported strong sales growth in its markets, along with exceptional execution throughout the business, which drove meaningful margin expansion. The balance sheet remained stellar with $32.3 million of cash and no debt. Graham raised full year gross margin and adjusted EBITDA estimates. GHM shares reacted favorably to the news, rising 17% to $39.07.
Financials. Record quarterly revenue of $53.6 million, up 19% y-o-y. Defense revenue was up 23%, Chemical/Petro sales were up 23%, and Space revenue was up 23%. Gross margin improved 790 basis points to 23.9%, fueled by sales growth and execution. Adjusted EBITDA rose 150% to $5.6 million. Adjusted net income up 353% to $3.4 million, or $0.31
Gray Television (GTN/$4.28 | Price Target: $20) Michael Kupinski mkupinski@noblefcm.com | (561) 994-5734 Jacob Mutchler jmutchler@noblefcm.com | An Uncharacteristic Miss Rating: OUTPERFORM
Misses Q3 expectations. Q3 revenue of $950.0 million was below our $1.02 billion estimate, with the largest variance due to lower than expected Political advertising and weaker core advertising. Political was $173.0 million versus our $200.0 million estimate. Q3 adj. EBITDA of $322.0 million was lower than our $396.0 million estimate. Figure #1 Q3 Results illustrate our estimates versus reported results.
Disappointing Political outlook. Management indicated that Q4 Political advertising will be in the range of $248 million to $253 million and in the range of $495 million to $500 million for the full year 2024, well below our $380 million and $652 million estimate, respectively. The shortfall appears to be due to a shift in spending for Senate and House races into more competitive markets which were outside of Gray’s footprint.
Information Services Group (III/$3.35 | Price Target: $5) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | Building Up for Growth in 2025 Rating: OUTPERFORM
More Profitable. Topline performance at $61.3 million was lower sequentially, however, it was above management’s guidance of $60-$61 million and higher than our estimate of $61 million. Importantly, the quarter resulted in a record high utilization of 77%, leading towards a higher gross margin of 40.4% from 39.5% last quarter. The higher gross margin flowed through to higher adjusted EBITDA margin of 11.6% from 11.1% in the prior quarter.
Potential Growth in 2025. Management noted that the ISG Tango platform is continuing to see growth in its contract value, now at $5 billion compared to $4 billion last quarter, a 25% increase. Notably, the increase is an example of signs of increased demand in the U.S. and we believe the market will improve as the election uncertainty has passed and the macroeconomy continues to improve.
Kratos Defense & Security (KTOS/$25.97 | Price Target: $30) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | Reports 3Q24 Results; Raising PT to $30 Rating: OUTPERFORM
Environment. The ongoing generational recapitalization of strategic weapon systems, including strategic satellites, air defense radar, and missile systems, continues to be a catalyst for Kratos. Current world events are driving demand for Kratos products, including target drones, which are used to exercise and test air defense systems.
Strong Engine. Kratos’ turbine technologies and engine business is generating record results, including having a record opportunity pipeline with hypersonic supersonic cruise missiles, loitering munitions drones, and space systems, all being expected future growth areas.
Ocugen (OCGN/$0.9862 | Price Target: $8) Robert LeBoyer rleboyer@noblefcm.com | (212) 896-4625 2Q24 Reported As We Look Forward To Clinical Showcase Data Rating: OUTPERFORM
Clinical Trials Continued, Capital Was Raised, and New Data Expected. Ocugen reported a loss for 3Q24 of $13.0 million or $(0.05) per share. The company reported continued enrollment in all of its ongoing clinical trials and has scheduled a Clinical Showcase meeting in New York on Tuesday, November 12, 2024. We expect the meeting presentations to include data updates from the clinical trials. In August, Ocugen completed a stock offering that raised $35 million to end 3Q24 with $38.7 million in cash. After the quarter ended, the company added $30 million in debt funding.
OCU400 in Retinitis Pigmentosa (RP) Is On Schedule. The company confirmed that the Phase 3 liMeliGhT (pronounced “Limelight”) trial continues to enroll patients and is on schedule to complete enrollment in 1H25. An approval by Health Canada will allow patient enrollment at up to 5 Canadian sites. The FDA has approved an expanded access program (EAP) to allow patients to be treated outside of the clinical trials before OCU400 receives market approval.
The GEO Group (GEO/$25.36) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | Moving to Market Perform as Shares Skyrocket Rating: MARKET PERFORM
Below Expectations. The GEO Group reported third quarter 2024 results below management’s and our expectations. Results in the quarter were driven by lower-than-expected revenues in the Electronic Monitoring and Supervision Services segment, reflecting reduced participant count. ICE populations have remained relatively flat over the past three quarters, although they are up y-o-y.
3Q24. GEO reported total revenues for the third quarter 2024 of $603.1 million compared to $602.8 million last year. We forecasted $612 million. Adjusted EBITDA was $118.6 million, flat with 3Q23. We were at $128 million. Net income for 3Q24 totaled $26.3 million, or $0.19 per diluted share, compared to $24.5 million, or $0.16 per diluted share, for 3Q23. Adjusted EPS was $0.21 per diluted share compared to $0.19 per diluted share for 3Q23. We had projected $0.25 and $0.26, respectively.
Zomedica Corp. (ZOM/$0.12 | Price Target: $0.25) Robert LeBoyer rleboyer@noblefcm.com | (212) 896-4625 Improving Pet Health and Veterinary Practices – Initiating Coverage With An Outperform Rating Rating: OUTPERFORM
Initiating Coverage of Zomedica Corp. With An Outperform Rating. We are initiating coverage of Zomedica, a company that makes and sells veterinary therapeutic devices and diagnostics. These products are used to diagnose and treat animals ranging from horses to cats, dogs, and other pets. Veterinarians use these products to improve the outcome and quality of care for the pet as well as to streamline workflow and profitability of their practice.
Zomedica Has Made Several Acquisitions To Build Its Product Lines Zomedica has grown by acquiring complementary businesses that broaden its product line and leverage its existing infrastructure. It has five product lines in therapeutic devices and diagnostics, two fast-growing segments of the animal health market. These products are marketed by its own sales force and commercial partnerships. We expect near-term growth to come from the introduction of new internally-developed applications that increase uses and grow sales of existing products.
Noble Capital Markets Research Report Friday, November 8, 2024
Companies contained in today’s report:
Cadrenal Therapeutics (CVKD)/OUTPERFORM – Cadrenal Reports 3Q24 With Tecarfarin Progress Updates CoreCivic, Inc. (CXW)/MARKET PERFORM – Another Solid Quarter GoHealth, Inc. (GOCO)/OUTPERFORM – The Pieces are in Place; Poised for a Strong AEP Information Services Group (III)/OUTPERFORM – A Look into the Third Quarter Kelly Services (KELYA)/OUTPERFORM – Reports 3Q24 Results Kratos Defense & Security (KTOS)/OUTPERFORM – First Look at 3Q24 Results Lifeway Foods (LWAY)/MARKET PERFORM – In Danone’s Corner Saga Communications (SGA)/OUTPERFORM – Resilient Amidst Economic Headwinds Schwazze (SHWZ)/OUTPERFORM – Reports Preliminary 3Q24 Results Townsquare Media (TSQ)/OUTPERFORM – Digital Revenue Gains Momentum
Financial Condition Improved In 3Q24. Cadrenal reported a loss of $2.4 million or $(2.18) per share, adjusted for the 1-for-15 reverse split on August 20, 2024. This loss was slightly less than our projections. Cash on September 30 was $4.4 million, excluding financing that brought in $9.8 million after the close of the quarter. The company reported that its current cash balance was approximately $11.3 million on November 7, 2024.
The Tecarfarin Made Progress In Its Next Indication. Cadrenal held a Type-B meeting with the FDA to discuss the planned Phase 3 trial for use of tecarfarin in patients with left ventricular assist devices. The company will use the guidance and comments from the meeting to design the pivotal trial. Cadrenal also continued to discuss collaborating with Abbott about a clinical trial with patients that have the Abbott HeartMate 3, the only LVAD available in the United States. Cadrenal has Orphan Drug designation for the LVAD indication, providing a strong incentive for collaborations.
CoreCivic, Inc. (CXW/$22.08) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | Another Solid Quarter Rating: MARKET PERFORM
3Q24 Results. CoreCivic’s financial results for the third quarter of 2024 demonstrated the Company’s continued strong operating momentum. Increased occupancy and higher per diems drove the increased revenue in the quarter. While ICE populations were relatively stable in the quarter, management did note populations have increased by 5% since the beginning of October. Operating margin increased compared with the prior-year quarter through continued cost management and strong demand for CXW’s services.
Opportunity. Obviously, with the coming change in the President, most industry observers expect to see a step change in the use of services provided by the industry. There also is significant opportunity at the state and local levels being driven by increasing jail populations, forecasts for prison population’s to rise over the next five years, ongoing staffing issues, and an aging physical stock.
GoHealth, Inc. (GOCO/$11.78 | Price Target: $22) Patrick McCann, CFA pmccann@noblefcm.com | (314) 724-6266 Michael Kupinski mkupinski@noblefcm.com | (561) 994-5734 The Pieces are in Place; Poised for a Strong AEP Rating: OUTPERFORM
Q3 beat. The company reported Q3 revenue of $118.3 million and an adj. EBITDA loss of $12.1 million, better than our estimates of $104.0 million and a loss of $14.1 million, respectively. Notably, the company benefited from improved efficiency with declines in direct costs of policy submissions and strong agent productivity.
Prepared for AEP. In our view, the company is well positioned heading onto this year’s Annual Enrolment Period (AEP) with several technological enhancements that drive favorable customer experiences and agent productivity. Using AI based tools, such as Plan GPT, the company has reduced its average call time from 90 minutes to 67 minutes. We believe the company could make additional incremental efficiency enhancements in Q4 and beyond, which could lead to more volume and margin improvement.
Information Services Group (III/$3.33 | Price Target: $5) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | A Look into the Third Quarter Rating: OUTPERFORM
Hitting the Top of Revised Guidance. ISG reported revenue and net income at the top end of the Company’s revised guidance and in-line with our estimates. Revenue for the quarter was $61.3 million, which while down 15% from last year, was slightly above our estimate of $61 million. Net income was $1.1 million, or EPS of $0.02, beating out our estimate of $0.2 million or flat EPS.
Rising Client Demand. Management noted that ISG Tango now includes over $5 billion of contract value, up from $4 billion in the previous earnings release. Management is seeing signs that client demand in the U.S. is on the rise, translating to higher spending. We believe that the rise in contract value offers a sign towards higher spending on projects.
Kelly Services (KELYA/$18.14 | Price Target: $27) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | Reports 3Q24 Results Rating: OUTPERFORM
Challenges. In the third quarter, Kelly remained focused on what it could control, but the uncertain economic environment persisted, impacting consolidated results. On an organic basis, revenue rose in two of the business units, while gross profit rate fell in three of the four units. Integration costs related to the MRP acquisition of $6.1 million also impacted results. Investors reacted negatively to the results, sending the shares down 18% to $18.14.
3Q24 Results. Revenue of $1.038 billion, down 7.1% y-o-y, but essentially flat on an organic basis. We were at $1.075 billion, the same as the consensus. Adjusted EBITDA of $26.2 million, up 2.7% y-o-y, but below our $34 million estimate and consensus $33 million. Net income of $0.8 million, or $0.02/sh and adjusted EPS of $0.21, compared to $0.18 and $0.50 in 3Q23.
Kratos Defense & Security (KTOS/$23.82 | Price Target: $26) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | First Look at 3Q24 Results Rating: OUTPERFORM
Solid Quarter. Kratos reported a solid quarter, with Unmanned Systems reporting 8.7% organic revenue growth. Turbine Technologies, Microwave Products, C5ISR, Defense Rocket Support, and Training Solutions businesses also all reported organic revenue growth. This was offset by the previously reported and expected decline of approximately $24.2 million in the Space and Satellite business, primarily resulting from the industry related impact from OEM delays.
3Q24 Results. Kratos reported revenue of $275.9 million, flat with the same period last year. We had estimated $280 million. Adjusted EBITDA was $24.6 million, compared to $27.7 million last year and our $21 million estimate. Reported net income was $3.2 million, or $0.02/sh, up from a $1.6 million loss, or a loss of $0.01/sh in 3Q23. Adjusted EPS was $0.11 compared to $0.12 last year. We were at $0.01 and $0.06, respectively.
Support for Danone. In response to Lifeway’s rejection of the Danone offer to acquire the Company, yesterday, Edward and Ludmila Smolyansky released a statement stating, among other things, “we strongly support Danone’s offer, which represents a substantial premium over Lifeway’s recent share price and reflects their confidence in the growing U.S. kefir market…” They go on to say, “As we approach one of most significant and closely watched earnings releases in Lifeway’s history, we remain optimistic about the company’s potential and believe that Danone’s proposal presents a unique opportunity to enhance value for all shareholders.”
Ownership. According to their most recent amended 13D filing dated August 14th, Edward and Ludmila may be deemed to be the beneficial owners of an aggregate of 4,332,451 shares of common stock, representing approximately 29.3% of the outstanding shares of common stock. This includes 500,000 shares (3.3% of the outstanding) held in a trust of which Edward and Julie each own 50%. Danone owns 3,454,756 shares representing 23.4% of the outstanding. Together, Danone and the Smolyansky’s control over 50% of the outstanding, even if we split the 500,000 trust shares equally.
Q3 results. The company reported Q3 revenue of $28.1 million and adj. EBITDA of $3.6 million, both of which were in line with our estimates of $28.7 million and $3.6 million, respectively. Notably, the company ended an unprofitable relationship with a digital services provider, which contributed to digital revenue growth slowing to 3.2% in Q3. While we anticipate this will make year-over-year digital revenue comparisons difficult in the short term, we believe the company’s digital segment offers a favorable growth outlook.
Q4 outlook. Management indicated that Q4 revenue is pacing down low to mid-single digits, highlighting a difficult advertising market that is feeling the effects of the high interest rate environment. Furthermore, operating expenses on a same station basis are guided to increase in the range of 3% – 5% over the prior year period. We anticipate this increase will largely be attributed to investments in the company’s digital growth initiatives.
Preliminary 3Q24 Results. Last night, Schwazze reported preliminary 3Q24 results. We believe the ongoing audit of past results is likely causing a delay in reporting results. According to the release, 3Q24 revenue is expected to be approximately $42 million, and adjusted EBITDA is expected to be approximately $11 million. In 3Q23, Schwazze reported revenue of $46.7 million and adjusted EBITDA of $14.1 million. We had estimated revenue of $44.5 million and adjusted EBITDA of $10.3 million.
Making Progress. In spite of the challenging operating environment, Schwazze continued to generate momentum from its retail growth and optimization initiatives in the quarter, reflected by the Company once again outpacing two highly competitive markets while generating sequential improvements in profitability and positive cash flow from operations. Management noted increased store traffic in both Colorado and New Mexico.
Townsquare Media (TSQ/$10.15 | Price Target: $21) Michael Kupinski mkupinski@noblefcm.com | (561) 994-5734 Jacob Mutchler jmutchler@noblefcm.com | Digital Revenue Gains Momentum Rating: OUTPERFORM
In line quarter. Total company revenues of $115.3 million was roughly flat with the year earlier period and in line with our $115.0 million estimate. Q3 adj. EBITDA was $25.5 million versus our $26.5 million estimate. Notably, the results were in line with the company’s previous guidance.
Digital revenue accelerates. Total digital revenue swung positive in the latest quarter, up 1.1%, the first time since q2 2023. The revenue improvement was led by its Ignite business (up 4.7%) and a significant moderation in the revenue decline at Townsquare Ignite (down 5.8%, much better than down 12.9% in Q2). Management indicated that Ignite’s Q4 revenue growth should triple to near 15% and Interactive should swing positive.
Noble Capital Markets Research Report Thursday, November 7, 2024
Companies contained in today’s report:
Bit Digital (BTBT)/OUTPERFORM – Steady Production in October Conduent Inc (CNDT)/OUTPERFORM – Q3 in Line: More Divestitures to Come? CoreCivic, Inc. (CXW)/MARKET PERFORM – Solid 3Q24 Results – A First Look Seanergy Maritime (SHIP)/OUTPERFORM – Third Quarter Financial Results Exceed Our Estimates The ODP Corporation (ODP)/OUTPERFORM – Accelerating B2B Pivot
Bit Digital (BTBT/$4.1 | Price Target: $5.5) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | Steady Production in October Rating: OUTPERFORM
AI Revenue In-line. As of October 31, Bit Digital had 256 servers actively generating revenue and earned approximately $4.3 million of unaudited revenue during the month, in-line with the prior month. With the recent agreement signed with Boosteroid, we expect an uptick in revenue in the coming months.
Mining Business. The Company produced 52.2 BTC in the month, a 1.4% increase from 51.5 BTC in September. The active hash rate was 2.43 EH/s, flat with the prior month. In our view, management is continuing to take an opportunistic approach to mining, with additional miner acquisitions based on appropriate returns on invested capital.
Conduent Inc (CNDT/$4.13 | Price Target: $7) Patrick McCann, CFA pmccann@noblefcm.com | (314) 724-6266 Michael Kupinski mkupinski@noblefcm.com | (561) 994-5734 Q3 in Line: More Divestitures to Come? Rating: OUTPERFORM
Q3 in line. The company reported a solid Q3 with revenue that was largely in line with our estimate and adj. EBITDA that was better than expected. Revenue of $807 million compared with our estimate of $814 million and adj. EBITDA of $36 million compared with our estimate of $24 million, illustrated in Figure #1 Q3 Results.
Revenue trends should improve. Adj. revenue, which excludes divested business units, was down in each of the 3 segments and down roughly 8% overall. In the company’s largest segment, Commercial, adj. revenue was down 3%, due to lower volumes. Importantly though, new business signings helped to mitigate the weakness and new business momentum is expected to continue for the remainder of the year.
CoreCivic, Inc. (CXW/$17.58) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | Solid 3Q24 Results – A First Look Rating: MARKET PERFORM
Solid Results and a Favorable Reaction. CoreCivic reported above expected 3Q24 results, driven by higher compensated occupancy and continued cost management. Notably, the results were achieved even with the headwinds of CalCity and South Texas, which resulted in ICE revenue declining 3.4% y-o-y. Excluding the South Texas facility, ICE revenue rose 10.9% y-o-y. CXW shares reacted favorably to the election results, rising nearly 30% to close at $17.58 yesterday.
Third Quarter Detail. Total revenue was at $491.6 million (including $5.7 million of deferred revenue related to South Texas), above our forecast of $479.5 million and above last year’s $483.7 million. Occupancy rates increased to 75.2% from 72.0% in the prior year. Operating margin improved 130 basis points y-o-y, reflecting the increased top line and cost control. Adjusted EBITDA was $83.3 million, up from $75.2 million. Net income was $21.1 million, or $0.19 per diluted share, compared to $13.9 million or $0.12 last year. Adjusted EPS was $0.20 versus $0.14 last year. We estimated net income of $10 million or $0.09 per diluted share.
Seanergy Maritime (SHIP/$9.42 | Price Target: $12) Mark Reichman mreichman@noblefcm.com | (561) 999-2272 Hans Baldau hbaldau@noblefcm.com | Third Quarter Financial Results Exceed Our Estimates Rating: OUTPERFORM
Third quarter financial results. The company reported third quarter adjusted EBITDA and earnings per share (EPS) of $26.8 million and $0.69, respectively, exceeding our estimates of $25.5 million and $0.61. Revenue was $1.1 million above our estimate, while expenses were only modestly higher. The variance to our net revenue estimate is attributed to lower commissions and greater fees from related parties. Operating income was $17.7 million compared to our estimate of $17.0 million.
Updating estimates. We are lowering our 2024 adjusted EBITDA and EPS estimates to $101.7 million and $2.52, respectively, from our previous estimates of $102.1 million and $2.56. Additionally, we are lowering our 2025 adjusted EBITDA and EPS estimates to $93.7 million and $1.93, respectively, from $102.0 million and $2.39. The revisions are mainly due to lower time charter equivalent (TCE) rates and more dry-docking days in 2025, resulting in lower operating days and net revenue than previously estimated.
The ODP Corporation (ODP/$27.57 | Price Target: $35) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | Accelerating B2B Pivot Rating: OUTPERFORM
3Q24 Results. Weak macroeconomic and business conditions resulted in challenging performance in the quarter. Third quarter revenue of $1.78 billion declined 11% y-o-y. Adjusted operating income was $41 million, down from $112 million in 3Q23. Adjusted EBITDA fell to $62 million from $138 million. ODP reported adjusted net income from continuing operations of $24 million, or EPS of $0.71, versus $85 million, or EPS of $2.17, in the same period last time.
Accelerating the Pivot. Given the recent operating challenges, ODP is accelerating its B2B pivot. The Company is leveraging its differentiated core strengths to pivot towards higher growth B2B opportunities. Recent contract wins, including a 10-year $1.5 billion contract with a reseller organization and a new contract with one of the world’s largest social media-focused e-commerce companies, are reflective of these efforts.
Noble Capital Markets Research Report Wednesday, November 6, 2024
Companies contained in today’s report:
Commercial Vehicle Group (CVGI)/OUTPERFORM – Post 3Q Call Commentary DLH Holdings (DLHC)/OUTPERFORM – New Contract Award Great Lakes Dredge & Dock (GLDD)/OUTPERFORM – Strong Results Continue Lifeway Foods (LWAY)/MARKET PERFORM – Rejects Danone; Implements Poison Pill
Commercial Vehicle Group (CVGI/$2.4 | Price Target: $8) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | Post 3Q Call Commentary Rating: OUTPERFORM
Cost Reduction Efforts. CVG has eliminated approximately 1,200 roles or roughly 15% of the organization’s workforce from continuing operations compared to the prior year through both restructuring and ongoing continuous improvement efforts. We believe these actions will create a lower cost, more efficient, and agile company positioned for future success.
Markets Remain Challenged. Both Class 8 truck sales and the Ag/Construction end markets remain soft. In 2025, current forecasts call for a relatively flat Ag/Construction market, while the Class 8 market will likely begin to turn up in the second half of the year.
DLH Holdings (DLHC/$8.69 | Price Target: $15) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | New Contract Award Rating: OUTPERFORM
New Award. DLH has been awarded a contract to support the Naval Information Warfare Center Atlantic’s (“NIWC Atlantic”) Tactical Networks. NIWC Atlantic conducts research, development, and engineering to bolster integrated information warfare capabilities, with an emphasis on Enterprise IT systems.
Details. The award has a total value of approximately $76 million, comprised of $61 million in initial firm value and $15 million in optional services. The contract term includes up to a five-year period of performance. As the prime contractor, DLH will perform In-Service Engineering Agent and Integrated Logistics Support services. DLH’s work will support the missions of several C5ISR program offices and systems including PEO-C4I, PMW-160, NAVWAR, NAVSEA, and others.
Great Lakes Dredge & Dock (GLDD/$11.61 | Price Target: $14) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | Strong Results Continue Rating: OUTPERFORM
Strong Results. Revenue for the quarter was up $74 million from last year to $191.2 million, beating our estimate of $185 million. Continued strong results from the Company’s capital and coastal protection projects contributed to the growth. Gross margin improved from 7.7% to 19.0%. Net income totaled $8.9 million, or EPS of $0.13, from a net loss of $6.2 million or $0.09/sh last year. Adjusted EBITDA increased to $27 million from $5.3 million last year.
Net Income. We would note reported net income was negatively impacted by two events we, and we believe other analysts had not included in their estimates. First, the Company moved forward a dry docking into the third quarter to take advantage of the recent strong awards and second, the impact of incentive comp taken in the quarter. Together, these two items increased expenses by an estimated $5-$6 million in the quarter.
Rejects Danone. Yesterday, Lifeway Foods announced its Board of Directors rejected the unsolicited proposal made by Danone North America PBC to acquire all the shares of Lifeway that it does not already own for $25.00 per share. According to the Board, Danone’s proposal substantially undervalues Lifeway. Lifeway shares rose on the news, indicating investors may believe an improved offer may materialize.
Adopts Poison Pill. In addition, the Company adopted a Rights Plan that becomes exercisable if an entity, person, or group acquires beneficial ownership of 20% or more of the outstanding shares of Lifeway common stock in a transaction not approved by the Board or if an entity, person or group that currently beneficially owns 20% or more of the outstanding shares of Lifeway common stock acquires any additional shares. Unless earlier redeemed, terminated, or exchanged pursuant to the Rights Plan, the rights will expire on November 4, 2025.
Noble Capital Markets Research Report Tuesday, November 5, 2024
Companies contained in today’s report:
Bit Digital (BTBT)/OUTPERFORM – Agreement Signed with Boosteroid Bowlero (BOWL)/OUTPERFORM – Keeping The Ball Rolling Commercial Vehicle Group (CVGI)/OUTPERFORM – Reports 3Q24 Results E.W. Scripps (SSP)/OUTPERFORM – Debt Overshadows Record Quarter FAT Brands (FAT)/OUTPERFORM – Files Form 10-12b Registration Statement for Planned Listing of Twin Hospitality Group MAIA Biotechnology (MAIA)/OUTPERFORM – SITC Late Breaking Presentation To Update Phase 2 THIO Data SelectQuote (SLQT)/OUTPERFORM – Tailwinds Appear Underway V2X (VVX)/OUTPERFORM – Record Quarterly Results
Bit Digital (BTBT/$3.37 | Price Target: $5.5) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | Agreement Signed with Boosteroid Rating: OUTPERFORM
MSA Signed. Yesterday, Bit Digital announced that the Company executed its Master Service Agreement (MSA) with Boosteroid Inc. This follows the previously signed binding term sheet with Boosteroid in August 2024. Importantly, the MSA is a five-year term and the Company has placed an initial purchase order of 300 GPUs for its servers.
Performance Impact. The purchase order translates to approximately $4.6 million over five years, or $0.9 million annualized. Management noted that the GPUs are expected to be delivered and begin earning revenue by the end of November. The GPUs will be installed in U.S. datacenters, with management noting there are another 600 GPUs in the pipeline for European datacenters. With the Enovum datacenter fully leased, the machines will go into third party locations, at least in the short-term.
Bowlero (BOWL/$10.38 | Price Target: $17.5) Michael Kupinski mkupinski@noblefcm.com | (561) 994-5734 Jacob Mutchler jmutchler@noblefcm.com | Keeping The Ball Rolling Rating: OUTPERFORM
Off to a good start. Fiscal Q1 end Sept. results were better than expectations. Revenues were $260.2 million versus our $240.0 million estimate. Adj. EBITDA was $62.9 million versus our $59.0 million estimate. The key revenue upside driver was a solid performance in Food & Beverage, up a strong 17.3% y-o-y and beating our estimate by a solid 10.7%. Figure #1 Q1 Results highlight the quarter versus our estimates.
Raises low end of fiscal 2025 guidance. Management increased its total revenue guidance for fiscal 2025 by $10 million on the low end of its previous guidance range of $1.22 billion to $1.28 billion, now $1.23 billion to $1.28 billion. The guidance implies attractive mid-single digit to 10% plus year over year revenue growth. Adj. EBITDA margins are expected to be 32% to 34%, or adj. EBITDA between $390 million to $430 million.
Commercial Vehicle Group (CVGI/$3.08 | Price Target: $8) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | Reports 3Q24 Results Rating: OUTPERFORM
Another Challenging Quarter. Third quarter revenue decreased 15.3% to $171.8 million from $202.9 million in the prior year. Operating loss was $1.1 million and adjusted operating loss was $0.4 million, down from operating and adjusted operating income of $8.9 million last year. Net loss was $0.9 million, or $0.03/sh, and adjusted net loss totaled $0.4 million, or $0.01/sh, compared to net income of $4.7 million, or $0.14/sh. Adjusted EBITDA was $4.3 million, down 64.8%. Note: results from the sold Cab Structures and Industrial Automation businesses have been reclassified to discontinued operations.
Soft Customer Demand. Continuing from the second quarter, the agricultural and construction end markets have had softer demand, impacting the Electrical Systems segment. The Vehicle Solutions and Aftermarket & Accessories segments also experienced decreased customer demand, alongside a lower margin business phase out and a reduced backlog, respectively.
E.W. Scripps (SSP/$2.27 | Price Target: $10) Michael Kupinski mkupinski@noblefcm.com | (561) 994-5734 Jacob Mutchler jmutchler@noblefcm.com | Debt Overshadows Record Quarter Rating: OUTPERFORM
Solid Q3 results. The company reported revenue of $646.3 million and adj. EBITDA of $176.8 million, both of which were record highs. Notably, the quarter was driven by strong political revenue of $125.2 million, which exceeded expectations. Furthermore, the company was able to capitalize on the influx of high-margin political revenue and pay down $115 million of debt in the quarter.
Record political advertising. The company generated $125.2 million in political revenue for Q3, a record high, and increased its full year political revenue guidance from $270 million – $290 million to a minimum of $340 million. The company’s increased 2024 political revenue guidance reflects a roughly 30% increase over its highest political advertising year, 2020.
FAT Brands (FAT/$5.32 | Price Target: $15) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | Files Form 10-12b Registration Statement for Planned Listing of Twin Hospitality Group Rating: OUTPERFORM
Form 10-12b. FAT Brands filed a Form 10-12b with the SEC. The Form 10-12b contains a preliminary information statement about the planned distribution to FAT Brands’ common shareholders of approximately 5% of the Class A Common Stock of Twin Hospitality Group and its planned listing on Nasdaq as an independent publicly traded company.
Unlocking Value. The filing of the Form 10 Registration Statement is an important milestone in unlocking value and growth opportunities for Twin Hospitality Group and the Twin Peaks brand, while continuing to generate long-term value for FAT Brands shareholders, in our view. The Company expects to complete the separation later this year.
MAIA Biotechnology (MAIA/$2.88 | Price Target: $14) Robert LeBoyer rleboyer@noblefcm.com | (212) 896-4625 SITC Late Breaking Presentation To Update Phase 2 THIO Data Rating: OUTPERFORM
Interim Update From Phase 2 Trial Scheduled For SITC. MAIA is scheduled to present a data update from the ongoing THIO-001 trial at a Late-Breaker session of the STIC (Society For The Immunotherapy of Cancer) Annual meeting on Saturday, November 9. The presentation could include data on endpoints and measures of efficacy such as disease control rate, overall survival, and median survival with additional patients and longer treatment times.
Trial Treats Patients With THIO and A Checkpoint Inhibitor. The THIO-001 trial enrolled advanced non-small cell lung cancer (NSCLC) patients that had progressive disease and no longer responded after two or more standard-of-care therapy regimens. Patients were treated with the combination of 3-week cycles of THIO and the standard dose of cemiplimab (350 mg Libtayo, an anti-PD-1 checkpoint inhibitor from Regeneron). Patient enrollment was completed in February 2024.
SelectQuote (SLQT/$2.03 | Price Target: $5) Patrick McCann, CFA pmccann@noblefcm.com | (314) 724-6266 Michael Kupinski mkupinski@noblefcm.com | (561) 994-5734 Tailwinds Appear Underway Rating: OUTPERFORM
Solid FY Q1 results. The company reported fiscal Q1 revenue growth of 26% to $292.3 million, better than our estimate of $275.1 million. Margins were also better than we anticipated; an adj. EBITDA loss of $1.7 million was significantly better than our estimate of a loss of $6.6 million.
Agents performing well. The company has a high concentration of tenured agents, who performed well in the quarter. A combination of efficient marketing and strong close rates primarily led to the better-than-expected revenue and profitability. Importantly, we believe the demonstrated strength of the company’s tenured agent force and strong consumer engagement this Annual Enrollment Period (AEP) could result in an impressive upcoming fiscal Q2 for the Senior segment.
V2X (VVX/$61.91 | Price Target: $72) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | Record Quarterly Results Rating: OUTPERFORM
A Record Quarter. Record revenue, net income, and adjusted EBITDA were driven by the Company’s alignment to well funded, critical missions. V2X’s full spectrum capabilities across the mission lifecycle continue to serve as a differentiator. We believe there remains additional opportunity for V2X through further optimization of the business, including enhancing the breadth and depth of the pipeline.
3Q24 Results. Revenue rose 8% to $1.08 billion, with continued double digit growth in the Indo-Pacific and Middle East areas. Reported operating income was $49.9 million and adjusted operating income totaled $76.9 million, versus $21.0 million and $59.5 million, respectively, last year. Adjusted EBITDA rose to $82.7 million from $64.7 million. V2X reported EPS was $0.47 and adjusted EPS was $1.29, compared to a loss of $0.21/sh and EPS of $0.73, respectively, in the third quarter last year.
Noble Capital Markets Research Report Monday, November 4, 2024
Companies contained in today’s report:
ACCO Brands (ACCO)/OUTPERFORM – 3Q Post Call Commentary Aurania Resources (AUIAF)/OUTPERFORM – Setting Up for the 2025 Drilling Program Century Lithium Corp. (CYDVF)/OUTPERFORM – Focus and Execution Comtech Telecommunications (CMTL)/MARKET PERFORM – Releases Full Year Results; Removes “Interim” Tag From CEO Cumulus Media (CMLS)/MARKET PERFORM – Revenue Visibility Still Murky
ACCO Brands (ACCO/$5.26 | Price Target: $12) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | 3Q Post Call Commentary Rating: OUTPERFORM
Green Shoots. In the third quarter, ACCO experienced growth across each of its segments. This was the second consecutive quarter of growth in computer accessories, which can be attributed to an improving demand environment as well as new product launches in gaming accessories. Growth was fueled by the successful rollout of new products as well as international expansion efforts.
Cash Flow. Following the historic pattern, ACCO generated significant cash flow in the quarter. CFFO in the quarter totaled $95.5 million, with CFFO for the nine month period totaling $96 million. On a year-to-date basis, CFFO is up $25 million. Free cash flow for the quarter totaled $89 million and is $87 million year-to-date. Free cash flow is up $26 million from the same period last year, reflecting improved working capital. Management continues to project full year free to be approximately $130 million.
Aurania Resources (AUIAF/$0.5 | Price Target: $0.65) Mark Reichman mreichman@noblefcm.com | (561) 999-2272 Setting Up for the 2025 Drilling Program Rating: OUTPERFORM
Kuri-Yawi geophysical survey. Aurania commenced an induced polarization (IP) geophysical survey over its Kuri-Yawi gold target where the discovery of numerous sinters in 2018 revealed the area to be highly prospective for epithermal gold mineralization. Kuri-Yawi is the most advanced epithermal target at the company’s Lost Cities-Cutucu project in southeastern Ecuador and may represent the quickest path for a successful outcome based on work that has already been completed, along with easy access. In 2020 and 2021, nine scout holes were drilled that indicated a vector to mineralization toward the northeast which is the focus of the IP survey.
Preparing for the 2025 drilling program. The IP survey is designed to identify deep conductors that could correspond to gold mineralization, and to target drill holes for the planned program in 2025. The IP survey is expected to be completed by mid-December 2024, with results expected in early 2025 following a review and interpretation of the data.
Century Lithium Corp. (CYDVF/$0.38 | Price Target: $2.35) Mark Reichman mreichman@noblefcm.com | (561) 999-2272 Focus and Execution Rating: OUTPERFORM
Lithium carbonate production at the pilot plant. Century Lithium has successfully produced battery-quality lithium carbonate at its Angel Island lithium project pilot plant and demonstrated it has an end-to-end process to produce lithium carbonate. The pilot plant utilizes the Company’s patent-pending process for chloride leaching combined with direct lithium extraction (DLE). Management is now focused on process optimization to reduce the project’s estimated capital and operating costs, along with advancing environmental studies, permitting, and project funding.
Progress on the environmental and permitting front. Century Lithium has completed a draft hydrological model and a draft Plan of Operations Additionally, Century has identified potential alternative locations for water supply closer to the project within its water rights permit to optimize resource usage.
Comtech Telecommunications (CMTL/$2.91) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | Releases Full Year Results; Removes “Interim” Tag From CEO Rating: MARKET PERFORM
4Q24 Results. Revenue totaled $126.2 million, down sequentially and down from $148.8 million in 4Q23. We were at $130 million. Gross margin fell to 21.5% from 32.6% a year ago and was below our 30.8% estimate. Adjusted EBITDA was $0.3 million versus $18.9 million in 4Q23. Driven by $64 million of impairment charges, Comtech reported a 4Q24 net loss of $100.6 million, or a loss of $3.48/sh versus a loss of $5.3 million, or $0.19/sh in 4Q23.
Going Concern Still. Although we were hopeful the “Going Concern” designation would go away following the refinancing, it remains. According to the 10-K, “the Company has suffered recurring losses and negative cash outflows from operations, and may be unable to maintain compliance with financial covenants required by its credit agreement that raise substantial doubt about its ability to continue as a going concern.”
Cumulus Media (CMLS/$0.94) Michael Kupinski mkupinski@noblefcm.com | (561) 994-5734 Joshua Zoepfel jzoepfel@noblefcm.com | Revenue Visibility Still Murky Rating: MARKET PERFORM
In-line Q3 results. The company reported revenue of $203.6 million and adj. EBITDA of $24.1 million, in-line with our estimates of $203.3 million and $24.8 million, respectively. Its digital businesses, now 20% of total revenues, was the highlight of the quarter, up 7.5% from the prior year. Political advertising was a little softer than expected, $4.4 million versus our $5.5 million estimate.
National/Network remains lackluster. National advertising is over 50% of total company revenues and carries very high margins. A recovery in National/Network will be key toward improved company fundamentals. Management indicated that National advertisers appear to be hesitant to spend, possibly
Noble Capital Markets Research Report Friday, November 1, 2024
Companies contained in today’s report:
1·800·Flowers.com, Inc. (FLWS)/OUTPERFORM – A Slow Start, But On Track Toward Growth ACCO Brands (ACCO)/OUTPERFORM – 3Q24 First Look Eledon Pharmaceuticals (ELDN)/OUTPERFORM – Islet Cell Transplant Results Are A Breakthrough For Diabetes Haynes International (HAYN)/MARKET PERFORM – Lowering Estimates to Reflect Anticipated Negative Revenue Impact of Boeing Strike NN Inc (NNBR)/OUTPERFORM – Accelerating on its Transformation
1·800·Flowers.com, Inc. (FLWS/$8.32 | Price Target: $14) Michael Kupinski mkupinski@noblefcm.com | (561) 994-5734 Jacob Mutchler jmutchler@noblefcm.com | A Slow Start, But On Track Toward Growth Rating: OUTPERFORM
Q1 results. The company reported Q1 revenue of $242.1 million, 3% lower than our estimate of $249.7 million. Adj. EBITDA loss of $27.9 million was below our estimate of negative $23.5 million. The lackluster results were partially attributed to roughly $3 million in wholesale revenue being pushed into Q2. A bright spot in Q1 was the effective management of input costs, which contributed to a gross margin improvement of 20 basis points from the prior year period.
Positioned for revenue growth. In our view, the company is positioned to benefit from several favorable developments, including expanded product offerings, a growing same-day delivery footprint and effective cost management of input prices. We believe thatrevenue trends should improve in coming quarters as inflation trends moderate and the general economy improves.
ACCO Brands (ACCO/$4.9 | Price Target: $12) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | 3Q24 First Look Rating: OUTPERFORM
3Q24. ACCO is beginning to see the fruits of its cost reduction and infrastructure initiatives with 3Q24 results in line with expectations and overall sales trends improving in the third quarter compared to the first half of the year. Gross margin expanded by 20 basis points-the seventh consecutive quarter of improvement-and SG&A costs were down 7% y-o-y.
Details. Revenue of $420.9 million was down 6% on a reported basis y-o-y, with comp sales off 5%, reflecting softer back-to-school demand as well as for certain office products, although technology accessories saw growth. We had projected revenue of $418 million. Reported operating income was $26.3 million. Adjusted operating income was $44.7 million, down from $46 million in 3Q23. GAAP net income was $9.3 million, or $0.09/sh, with adjusted net income of $22.5 million, or $0.23/sh. In 3Q23, ACCO reported net income of $14.9 million, or $0.15/sh, and adjusted net income of $23.1 million, or $0.24/sh. We were at $0.15/sh and $0.24/sh, respectively.
Eledon Pharmaceuticals (ELDN/$4.65 | Price Target: $10) Robert LeBoyer rleboyer@noblefcm.com | (212) 896-4625 Islet Cell Transplant Results Are A Breakthrough For Diabetes Rating: OUTPERFORM
Islet Cell Transplant Patients Achieve Insulin Independence. A clinical study using tegoprubart as an immunosuppressant in islet cell transplantation was presented at a medical meeting on Tuesday, October 29, 2024. The first two subjects receiving islet cell transplants with tegoprubart as an immunosuppressant were able to regulate their blood glucose and achieve insulin independence. We see this as a significant advance that could enable islet cell transplantation to become a treatment for diabetes.
Tegoprubart Prevented The Toxicities That Have Led To Failure. Previous attempts to transplant healthy islet cells to restore insulin production have been unsuccessful. This is partly due to side effects of tacrolimus, the immunosuppression drug that is effective but toxic to the kidney and islet cells. This trial used tegoprubart instead of tacrolimus, resulting in islet cells surviving, engrafting, and producing insulin at effective levels.
Haynes International (HAYN/$60.36) Mark Reichman mreichman@noblefcm.com | (561) 999-2272 Lowering Estimates to Reflect Anticipated Negative Revenue Impact of Boeing Strike Rating: MARKET PERFORM
Boeing strike. In fiscal year 2023 and for the first nine months of fiscal 2024, aerospace represented 49% and 51% of Haynes’ net revenue. A significant portion of the company’s aerospace sales are dependent on the number of aircraft built by The Boeing Company and Airbus. On September 13, Boeing union members went on strike after rejecting a contract proposal from the company. Boeing has extended a pause on component shipments for several of its programs. While we are hopeful that the strike will be resolved soon, we expect it to have a negative impact on Haynes’ fourth quarter of fiscal year 2024 which ended September 30 and the first quarter of fiscal year 2025 which ends on December 31, 2024. Seasonally, the first quarter of the fiscal year is generally the company’s weakest.
Updating estimates. We have lowered our 2024 EBITDA and EPS estimates to $67.4 million and $2.46, respectively, from $68.5 million and $2.52. The revisions reflect weaker demand in the aerospace segment and lower sales expectations for the fourth quarter. Our expectations for weaker demand extend into fiscal year 2025, and we have lowered our EBITDA and EPS estimates to $82.5 million and $3.35, respectively, from $99.5 million and $4.15. Our revisions reflect lower shipment, revenue, and margin expectations, particularly during the first half of the year.
NN Inc (NNBR/$3.15 | Price Target: $6) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | Accelerating on its Transformation Rating: OUTPERFORM
Adjusted Results. Adjusted net loss during the quarter was $2.5 million, or $0.05 per share compared to adjusted net income of $0.1 million or $0.01 last year. Adjusted EBITDA was $11.6 million, or a margin of 10.2%, compared to last year’s $14.5 million or 11.6%. Both items were impacted by the Company’s rationalization of plants undergoing turnarounds and the sale of the Lubbock plastic plant operations.
Accelerated Transformation. Management has been accelerating its transformation initiatives, as the Company continues to win business, nearing the lower end of guidance for the year, and is continuously undergoing cost reduction, including $2 million in annualized cost savings enacted in the third quarter. New business wins bring over higher margins for NN at over 20% compared to the legacy business at around 11%, providing higher gross margins overtime as legacy contracts become more offset.
Noble Capital Markets Research Report Thursday, October 30, 2024
Companies contained in today’s report:
FAT Brands (FAT)/OUTPERFORM – Challenged Operational Results; But Moving Forward With Value Creation NN Inc (NNBR)/OUTPERFORM – A First Look at the Third Quarter Perfect Corp (PERF)/OUTPERFORM – Developing Additional Revenue Growth Catalysts
FAT Brands (FAT/$5.34 | Price Target: $15) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | Challenged Operational Results; But Moving Forward With Value Creation Rating: OUTPERFORM
Overview. FAT Brands 3Q24 results were below our expectations, mostly due to underperformance at the Smokey Bones brand. Development deals continued strongly, although new store openings are below plan as franchisees have taken a more conservative stance on new openings. Management continues to move forward with value creation efforts, specifically with Twin Peaks, and is hopeful of announcing additional developments in the coming weeks.
3Q24 Results. Revenue of $143.3 million was up 31.1% y-o-y but was down from $152 million reported in 2Q24. We had estimated $159.9 million. Adjusted EBITDA totaled $14.1 million, down from $21.9 million in 3Q23 and $15.7 million in 2Q24. FAT Brands reported a net loss of $44.8 million, or $2.74/sh, compared to a net loss of $24.7 million, or $1.59/sh, last year. We had forecasted a net loss of $32 million, or $1.88/sh.
Focused on Business Wins and Costs. NN is continuing to achieve business wins with $15 million in new business wins in the quarter, totaling $49 million year-to-date, near the bottom of its $55-70 million range for the year. The Company’s transformation program is moving faster than anticipated, as evidenced by the new business growth, along with operational efficiency and structural cost reductions. An example of the latter being the previous sale of the plastics plant in July and closure of the Dowagiac plant to move operations to China, further lowering costs.
3Q Results. Third quarter results were slightly below expectations with net sales of $113.6 million, below last year’s $124.4 million and our estimate of $125 million, due to the sale of the Lubbock operations. Excluding the sale, rationalized volume at plants undergoing turnarounds, and a customer settlement, sales were down 0.5%. Adjusted EBITDA was $11.6 million, down from $14.5 million last year and our $13.9 million estimate. With decisions such as the plant closure and higher margins of new business, we expect improved performance in the short term.
Perfect Corp (PERF/$1.86 | Price Target: $5) Patrick McCann, CFA pmccann@noblefcm.com | (314) 724-6266 Michael Kupinski mkupinski@noblefcm.com | (561) 994-5734 Developing Additional Revenue Growth Catalysts Rating: OUTPERFORM
Strong Q3 results. The company demonstrated attractive 11% revenue growth in Q3 with revenue of $16.1 million, slightly better than our estimate of $15.7 million. Adj. EBITDA and adj. net income for the quarter were both better than our expectations, due to lower-than-expected marketing, G&A, and R&D expenses.
Revenue drivers. The company’s B2C segment drove Q3 revenue growth, while the B2B segment revenue was more flat, as some of the company’s enterprise clients have faced economic challenges. Importantly, the company’s B2C web-based offering should bolster B2C revenue growth. As for B2B, interest rate cuts should have a positive impact on clients’ enterprise software budgets. Moreover, the company could increase contract values through new services, such as Perfect GPT.
GDEV Inc (GDEV/$37.69 | Price Target: $70) Michael Kupinski mkupinski@noblefcm.com | (561) 994-5734 Patrick McCann, CFA pmccann@noblefcm.com | (314) 724-6266 Q3 Preview: Upside Surprise Potential Rating: OUTPERFORM
Q3 preview. We estimate the company’s upcoming Q3 revenue and adj. EBITDA to be $103.0 million and $4.9 million, respectively. There is the prospect for an upside surprise, however, particularly for adj. EBITDA. We believe that the company’s ongoing strategy for improving operational efficiency could be reflected in this quarter. The company is expected to report Q3 results in the second week in November.
Enhancing efficiency. During the company’s Q2 earnings call, management highlighted its focus on efficiency in its user acquisition strategy. We believe the company’s efficient use of marketing spend, particularly in areas that provide sufficient returns, could indicate upside surprise potential for adj. EBITDA, not only from our estimate, but also the Street consensus which is $8.5 million.
Perfect Corp (PERF/$1.88 | Price Target: $5) Patrick McCann, CFA pmccann@noblefcm.com | (314) 724-6266 Michael Kupinski mkupinski@noblefcm.com | (561) 994-5734 B2C Drives Q3 Beat Rating: OUTPERFORM
Q3 beat. Perfect Corp. reported better-than-expected Q3 results. The company reported Q3 revenue of $16.1 million, slightly better than our estimate of $15.7 million. Adj. EBITDA of $1.2 million and adj. net income of $3.2 million were also better than our estimates of a loss of $0.3 million and a gain of $1.6 million, respectively. Figure #1 Q3 Results highlights how the performance compared with our forecast.
B2C leading the way. Management noted that the company’s B2C segment was the key revenue growth driver in the quarter. Moreover, the company is poised to capitalize on an expanding B2C opportunity set with a web-based service offering. Notably, web-based services offer higher margins than the company’s mobile app offerings, due to the lack of Android and iOS app store fees.
Noble Capital Markets Research Report Tuesday, October 29, 2024
Companies contained in today’s report:
Alliance Resource Partners (ARLP)/OUTPERFORM – Third Quarter Results Negatively Impacted by Operational Challenges
Alliance Resource Partners (ARLP/$25.5 | Price Target: $28) Mark Reichman mreichman@noblefcm.com | (561) 999-2272 Third Quarter Results Negatively Impacted by Operational Challenges Rating: OUTPERFORM
Third quarter financial results. Alliance reported third quarter EBITDA and earnings per unit (EPU) of $170.7 million and $0.66, respectively, compared to $227.6 million and $1.18 during the prior year period. We had forecast adjusted EBITDA of $220.5 million and $0.82, respectively. Revenue declined 3.6% to $613.6 million because of lower coal sales prices which declined 2.1% due in part to lower export pricing in Appalachia. Operating expenses increased 13.5% due to a longwall move and challenging mining conditions at all three Appalachia operations that reduced recoveries and increased costs. The partnership also experienced a $2.3 million loss related to its equity investment in Francis Energy.
Adjusting estimates. We have lowered our 2024 EBITDA and EPU estimates to $760.1 million and $3.25, respectively, from $813.6 million and $3.60. Our estimates reflect lower coal sales and higher segment adjusted EBITDA expense per ton. Additionally, we have modestly lowered our 2025 EBITDA and EPU estimates to $831.7 million and $3.40, respectively, from $835.2 million and $3.43.
Noble Capital Markets Research Report Thursday, October 24, 2024
Companies contained in today’s report:
FreightCar America (RAIL)/OUTPERFORM – Raising Price Target Based on Higher Revenue and Margin Growth Expectations The ODP Corporation (ODP)/OUTPERFORM – A Varis Sale Travelzoo (TZOO)/OUTPERFORM – Acceleration In Growth Expected In 2025
FreightCar America (RAIL/$12.73 | Price Target: $14.75) Mark Reichman mreichman@noblefcm.com | (561) 999-2272 Raising Price Target Based on Higher Revenue and Margin Growth Expectations Rating: OUTPERFORM
Pure play manufacturer. FreightCar America, Inc. is a diversified manufacturer of railroad cars and rail car components. The company designs and manufactures a broad variety of railroad car types for the transportation of bulk commodities and containerized freight products primarily in North America. The company reported strong second-quarter financial results and appears poised for greater scale and margin expansion as it increases its market share and expands its product suite.
On the path to greater profitability. While the company has broadened and diversified its product portfolio, we expect further growth into new areas such as producing tank cars which is expected to support margin expansion. Growth in the conversion and rebody business, along with increased parts sales, could enhance gross margins and reduce the company’s top-line sensitivity to the cyclicality associated with new railroad car orders. Additionally, we think FreightCar America will continue to improve its cost profile through productivity and efficiency gains.
The ODP Corporation (ODP/$30.9 | Price Target: $35) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Jacob Mutchler jmutchler@noblefcm.com | A Varis Sale Rating: OUTPERFORM
A Sale. The ODP Corporation reported that on October 18, 2024, the Company sold its Varis Division to an affiliate of Arising Ventures. The Company did not release the terms of the agreement. We expect to see additional detail on the Company’s third quarter earnings call.
Details. ODP is retaining a minority interest of 19.9% after the sale. Under the terms of the agreement, the Company will fund up to $4 million of expenses that Varis may incur following the transaction date until December 31, 2025, and has no further obligations to contribute capital to Varis. The terms of the sale did not result in a materially different impact on the Company’s financial statements than previously estimated.
Travelzoo (TZOO/$14.6 | Price Target: $18) Michael Kupinski mkupinski@noblefcm.com | (561) 994-5734 Joshua Zoepfel jzoepfel@noblefcm.com | Acceleration In Growth Expected In 2025 Rating: OUTPERFORM
Steady as she goes. Third quarter results were in line with our estimates, with revenue of $20.1 million (down 2.4% year over year), versus our estimate of $20.9 million. Adj. EBITDA was $4.6 million (up 19.3% year over year), better than our estimate of $3.8 million by almost 21% due to lower than expected sales & marketing expenses.
Swing toward revenue growth. Advertising revenue was down slightly to $19.7 million from $20.0 million in Q2, with membership revenue up from $1.2 million in Q2 to $1.4 million in Q3. The membership revenue increase reflected improved subscriptions with Jack’s Flight Club, which was expanded into Canada.
Noble Capital Markets Research Report Wednesday, October 23, 2024
Companies contained in today’s report:
Comstock Inc. (LODE)/OUTPERFORM – Making Significant Progress on Multiple Fronts EuroDry (EDRY)/OUTPERFORM – Expecting Weak Third Quarter Financial Results but a Strong Finish to the Year Euroseas (ESEA)/OUTPERFORM – Raising Estimates on New Vessel Deliveries and Charters
Comstock Inc. (LODE/$0.488 | Price Target: $2.5) Mark Reichman mreichman@noblefcm.com | (561) 999-2272 Making Significant Progress on Multiple Fronts Rating: OUTPERFORM
Pending transaction with SBC Commerce. Comstock recently executed an indicative term sheet for $325 million, or $315 million net of transaction fees, in funding through SBC Commerce LLC (SBCC), a U.S. based private equity group. The transaction is contingent on final due diligence and applicable regulatory approvals and is expected to close in tranches over the next several months. When the transaction was announced, it contemplated SBCC taking equity ownership positions in each business unit commensurate with the amount of its investment. Increasingly, it appears that a portion of the transactions could include debt which could have implications for our valuation which is currently based on the terms summarized in the original release.
Third quarter 2024 achievements. Comstock achieved significant milestones during the third quarter, including executing an exclusive license and cooperative research and development agreement with the Department of Energy’s National Renewable Energy Laboratory, executing an international license agreement for three industry scale fuel hubs, recording first revenues from the sale of recycled aluminum and announcing new contracts with new customers for the decommissioning and disposal of solar panels.
EuroDry (EDRY/$19.48 | Price Target: $29) Mark Reichman mreichman@noblefcm.com | (561) 999-2272 Hans Baldau hbaldau@noblefcm.com | Expecting Weak Third Quarter Financial Results but a Strong Finish to the Year Rating: OUTPERFORM
Updating estimates. We lowered our 2024 net loss and loss per share estimates to $(2.3) million and $(0.85), respectively, from $(1.8) million and $(0.65). Our revisions were driven by an increase in dry-docking expenses during the third quarter and modestly lower average shipping rates. While we are forecasting a third quarter loss, we expect a relatively strong fourth quarter. We forecast 2025 EBITDA and EPS of $37.3 million and $5.65, respectively.
Market fundamentals. The outlook for the remainder of 2024 remains positive, particularly in the Capesize market which is expected to benefit from Atlantic iron ore and bauxite exports. Rates for Panamax and smaller vessels are expected to remain stable at current rates. Disruptions in the Red Sea have caused re-routing of vessels around Africa which have increased ton-miles. In 2025, bulker earnings may be impacted by outcomes of the Red Sea situation and global economic growth and infrastructure spending, particularly with respect to China.
Euroseas (ESEA/$43.74 | Price Target: $67) Mark Reichman mreichman@noblefcm.com | (561) 999-2272 Hans Baldau hbaldau@noblefcm.com | Raising Estimates on New Vessel Deliveries and Charters Rating: OUTPERFORM
New Time Charter Contracts: Euroseas executed new time charter contracts for three feeder vessels, M/V Tender Soul, M/V Dear Panel, and M/V Symeon P. All three contracts are for a minimum period of 34 months and a maximum period of 36 months at a rate of $32,000/day. The charter for M/V Tender Soul is considerably higher than its previous $17,000 and is expected to take effect in early to mid-December. M/V Dear Panel and M/V Symeon P. are the last two of the company’s nine-vessel newbuilding program and are expected to be delivered at the beginning of January 2025. These charters are expected to contribute about $79 million of EBITDA for the minimum contract period, increasing the company’s 2025 coverage to roughly 63%.
Picking its sweet spot. The company has made it a point to build out its fleet with a focus on smaller feeder vessels, insulating itself from historical growth in the industry orderbook. Furthermore, Euroseas has invested in eco-friendly vessels as the market continues to push for more environmental regulations. We believe these new profitable charters highlight the success of this two-pronged strategy.
Noble Capital Markets Research Report Tuesday, October 22, 2024
Companies contained in today’s report:
Direct Digital Holdings (DRCT)/MARKET PERFORM – A Pretty Big Reset
Direct Digital Holdings (DRCT/$2.61) Michael Kupinski mkupinski@noblefcm.com | (561) 994-5734 Patrick McCann, CFA pmccann@noblefcm.com | (314) 724-6266 A Pretty Big Reset Rating: MARKET PERFORM
Getting back on track. The company made a substantial step forward by becoming current on its filings. On Tuesday, October 15th, it reported full year 2023, first quarter 2024, and second quarter 2024 results. The delay in its filings was due to the resignation of the company’s previous auditor, Marcum.
Issues unrelated to the audit. During the first half of the year, the company’s Sell-side revenue was disrupted when its largest client paused service, which coincided with a lawsuit with an activist shareholder. The client subsequently reconnected to the company’s SSP, but volumes have not yet fully recovered. This severely disrupted Q2 results and appears will have a lingering effect for the balance of the year.
Noble Capital Markets Research Report Monday, October 21, 2024
Companies contained in today’s report:
Perfect Corp (PERF)/OUTPERFORM – An AI Company Positioned to Accelerate Revenue Growth
Perfect Corp (PERF/$1.94 | Price Target: $5) Patrick McCann, CFA pmccann@noblefcm.com | (314) 724-6266 Michael Kupinski mkupinski@noblefcm.com | (561) 994-5734 An AI Company Positioned to Accelerate Revenue Growth Rating: OUTPERFORM
Initiating coverage with Outperform rating. We are initiating coverage on Perfect Corp., an AI technology company, with an Outperform rating and $5 price target. The prospect of additional interest rate cuts should lead to an improving environment for the company to grow its enterprise client base, leading to enhanced revenue growth and improving margins.
Seizing B2B and B2C opportunities. The company’s AI and AR technology powers its market leading virtual try-on service, used by beauty brands and retailers alike for skincare products and makeup. The company also leverages its technology to offer a suite of products direct to consumers through its apps. These include capabilities like AI-enhanced photo editing and generative AI.
Noble Capital Markets Research Report Friday, October 18, 2024
Companies contained in today’s report:
Bit Digital (BTBT)/OUTPERFORM – Refining Third Quarter Estimates Comtech Telecommunications (CMTL)/MARKET PERFORM – Announces Transformation into Pure Play Satellite and Space Communications Company SelectQuote (SLQT)/OUTPERFORM – Debt Reduction Strategy Becomes Tangible
Bit Digital (BTBT/$3.88 | Price Target: $5.5) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | Refining Third Quarter Estimates Rating: OUTPERFORM
Management Comments. We had an opportunity to speak with management to further refine our go forward projections following the Enovum acquisition announcement. Management noted the mining business continues to be impacted post halving with reduced BTC production. Bit Digital mined 165.5 BTC in 3Q24, down from 244.2 BTC in 2Q24 and 410.7 BTC in 1Q24. For its GPU Cloud Services, management provided no new update on the Boosteroids contract or on its key customer and has seen roughly steady income throughout the third quarter. We had anticipated additional deployments under the key customer contract in 2024.
New Estimates. With the comments made from management, we refined our estimates to reflect the operating environment on both the segments. The lower BTC production results in a drop in 3Q24 mining revenue to $10.3 million from a prior $13.5 million, while our GPU segment revenue falls to $12.5 from a prior $18 million. For the third quarter, we now estimate total revenue of $23.2 million from our prior model of $31.9 million. Net loss is now $2.5 million or a loss of $0.02/sh from a prior estimate of net income of $1.5 million or $0.01/sh. Adj. EBITDA is now $6.7 million down from $10.6 million. For the year, we estimate total revenue of $120.5 million, down from our prior $133.2 million, net income of $37.5 million or EPS of $0.30, down from $42.1 million or $0.33, and adj. EBITDA of $78.7 million, down from $82.8 million.
Comtech Telecommunications (CMTL/$3.54) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | Announces Transformation into Pure Play Satellite and Space Communications Company Rating: MARKET PERFORM
Transformation. Last night, Comtech issued a press release announcing its Board of Directors and management team are executing a strategy to transform Comtech into a pure-play satellite and space communications company and provided a capital structure update.
Strategic Alternatives. A key element of the plan is the potential sale of the Company’s Terrestrial & Wireless Networks business. According to the Board, “given the strength and value we see in our T&W segment, we initiated a process to explore strategic alternatives for this business to unlock value for Comtech shareholders.” If T&W can fetch peer group type multiples, this business segment alone would be worth well in excess of Comtech’s current enterprise value, in our view.
SelectQuote (SLQT/$2.1 | Price Target: $5) Patrick McCann, CFA pmccann@noblefcm.com | (314) 724-6266 Michael Kupinski mkupinski@noblefcm.com | (561) 994-5734 Debt Reduction Strategy Becomes Tangible Rating: OUTPERFORM
De-levering effort takes a step forward. On October 15, the company completed its previously announced securitization of a portion of its commission receivables, resulting in $100 million of newly issued securitized notes. With the proceeds, the company is paying down $100 million of its existing term loans. Importantly, the company also extended the maturities of the balance of its term loans to late 2027 (previously maturing in early 2025).
Attractive financing option. The average effective interest rate on the newly issued securitized loans is roughly 8.5%, significantly better than the company’s term loan effective rate (nearly 15%). Moreover, the newly created asset backed securities are investment grade and the company could offer the product to third-party asset managers in the future. Given that it has roughly $1 billion in commission receivables, we believe securitization is a powerful debt reduction tool for the company
Noble Capital Markets Research Report Thursday, October 17, 2024
Companies contained in today’s report:
Alliance Resource Partners (ARLP)/OUTPERFORM – ARLP To Report Third Quarter Financial Results on October 28 Bitcoin Depot (BTM)/OUTPERFORM – 3Q24 Preview: Fine Tuning Estimates Comtech Telecommunications (CMTL)/MARKET PERFORM – NT 10-K, Fourth Quarter Challenged Tonix Pharmaceuticals (TNXP)/OUTPERFORM – NDA Filing Submission For Tonmya Beats Expected Timeframe
Alliance Resource Partners (ARLP/$24.94 | Price Target: $28) Mark Reichman mreichman@noblefcm.com | (561) 999-2272 ARLP To Report Third Quarter Financial Results on October 28 Rating: OUTPERFORM
Crude oil and natural gas prices. Because ARLP has hedge-free exposure to commodity prices within its oil and gas royalty business, we revised our model to reflect updated commodity prices. We have revised our 2024 average crude oil and natural gas price estimates to $75.97 per barrel and $2.37 per Mcf, respectively, from $77.66 and $2.32. Our average 2025 crude oil and natural gas price estimates were lowered to $68.41 per barrel and $3.17 per Mcf from $71.39 and $3.22.
Updating estimates. We have trimmed our 2024 EBITDA and EPS estimates to $813.6 million and $3.60, respectively, from $816.1 million and $3.61. Our 2025 EBITDA and EPS estimates were lowered to $835.2 million and $3.43, respectively, from $841.0 million and $3.47. Beyond hedge-free exposure to crude oil and natural gas, ARLP’s ownership of bitcoin may also influence results. As of June 30, Alliance owned 452 bitcoins. On June 30, the price of a bitcoin closed at $62,678.29 compared to $63,329.50 on September 30. The bitcoin price closed at $67,640.84 on October 16. While there is a futures market, we generally do not try to predict the price of bitcoin or how many coins the partnership may sell during any given quarter.
Bitcoin Depot (BTM/$1.53 | Price Target: $7) Patrick McCann, CFA pmccann@noblefcm.com | (314) 724-6266 Michael Kupinski mkupinski@noblefcm.com | (561) 994-5734 3Q24 Preview: Fine Tuning Estimates Rating: OUTPERFORM
Tweaking Q3 forecast. In anticipation of the company’s upcoming Q3 release, we are fine tuning our forecast, by tweaking down our Q3 revenue forecast from $134.0 million to $130.6 million, but maintaining our adj. EBITDA estimate of $7.8 million, as illustrated in Figure #1 Q3 Forecast Revisions.
A conservative approach. Our revision reflects the very near term adverse revenue impact from new kiosks. The company should add 900 kiosks in the second half of 2024. Installed kiosks typically ramp up volume and revenues over a 6 to 9 month period. We are taking a conservative approach to the revenue generation of newly installed kiosks.
Comtech Telecommunications (CMTL/$4.39) Joe Gomes, CFA jgomes@noblefcm.com | 561-999-2262 Joshua Zoepfel jzoepfel@noblefcm.com | NT 10-K, Fourth Quarter Challenged Rating: MARKET PERFORM
NT 10-K. Yesterday, after the market close, Comtech filed with the Securities & Exchange Commission a Form 12b-25 disclosing the Company will not be filing its 10-K annual statement in a timely manner. In addition, management noted it anticipates a significant change in its fiscal 2024 GAAP results, primarily due to lower-than-expected performance during its fiscal fourth quarter.
4Q24 Performance. According to the filing, the Company anticipates a significant change in its fiscal 2024 GAAP results of operations, as compared to fiscal 2023, primarily due to lower-than-expected performance during its fourth quarter of fiscal 2024 in its Satellite and Space Communications segment, including non-cash impairment charges related to goodwill associated with the segment and long-lived assets pertaining to its steerable antenna operations located in the United Kingdom. The aggregate non-cash impairment charge is estimated to range between $60.0 million and $70.0 million.
NDA Submission Starts The FDA Review Clock. Tonix announced that it has submitted the New Drug Application (NDA) for Tonmya, its proprietary formulation of cyclobenzaprine hydrochloride for treating fibromyalgia. As discussed in our Research Note on October 11, this is slightly ahead of our expected timeframe of late October.
NDA Acceptance May Be Received Before YE2024. The FDA usually conducts a preliminary evaluation to determine if an application is complete and meets requirements for its full review. An “acceptance for filing” notification is usually made within 60 days of the submission, with the FDA’s statutory date for completing the review under the Prescription Drug User Fee Act (known as the PDUFA.
Key Points: – The Biden administration finalized a tax credit offering up to $3 per kilogram for cleaner hydrogen production under the Inflation Reduction Act. – Groups cautiously support the move but warn about potential loopholes rewarding “dirty” hydrogen producers. – Clean hydrogen is expected to aid hard-to-electrify industries like steel manufacturing, aviation, and marine shipping in reducing carbon emissions.
The Biden administration has introduced finalized rules for a tax credit that promises billions of dollars to support cleaner hydrogen production. The rules, released Friday, aim to accelerate the transition away from fossil fuels in industries like transportation, steelmaking, and manufacturing, sectors that are notoriously challenging to decarbonize.
Hydrogen, hailed as a potential clean energy solution, is primarily produced today from natural gas, which emits significant greenhouse gases. However, it can also be produced using renewable or low-emission energy sources like solar, wind, or nuclear power. The new credit, part of the Inflation Reduction Act, is designed to encourage such low-carbon methods.
Under the final rules, producers using renewable energy to split water into hydrogen and oxygen can qualify for the full $3-per-kilogram credit. Producers relying on natural gas may also receive the full credit if they employ carbon capture and sequestration technologies. Alternative methods, such as using biogas or methane from landfills, could also qualify for varying levels of support.
Environmental groups have expressed cautious optimism about the rules. The Clean Air Task Force lauded the policy’s potential to reduce emissions by incentivizing cleaner hydrogen production methods.
“If the hydrogen qualifies for a credit, it means it’s being produced with fewer emissions than the fossil fuels it aims to replace,” said Conrad Schneider, senior director at the Clean Air Task Force.
However, concerns remain. Earthjustice highlighted the risk of “dirty hydrogen” producers exploiting loopholes. Critics worry that hydrogen derived from natural gas, even with carbon capture, might not meet stringent climate goals if methane emissions from gas extraction and transportation are not adequately monitored.
Treasury Deputy Secretary Wally Adeyemo emphasized that the credit, coupled with the Bipartisan Infrastructure Law, represents a transformative step for clean hydrogen development.
“We are advancing the world’s most ambitious policies to support clean hydrogen,” Adeyemo stated, pointing to its potential to replace fossil fuels in hard-to-decarbonize sectors like aviation and marine shipping.
The Fuel Cell & Hydrogen Energy Association, which includes over 100 members across the hydrogen value chain, welcomed the clarity provided by the finalized rules. However, Frank Wolak, the association’s president, expressed uncertainty about how the tax credit would impact industry investment decisions.
“The big question is whether this tax credit will universally spur confidence and drive investments or only work for certain players,” Wolak remarked.
As the clean hydrogen industry begins to navigate this new policy landscape, it faces challenges in ensuring the accurate tracking of emissions, particularly for hydrogen produced using natural gas. The effectiveness of the credit in advancing clean energy solutions while avoiding loopholes remains to be seen.
Key Points: – Unity Software shares surged nearly 10% after a cryptic post by Keith Gill, known as “Roaring Kitty,” on X. – The post referenced a Rick James song titled “Unity,” which sparked enthusiasm among meme stock traders. – Unity’s stock had fallen 45% in 2024 due to controversies, including the “runtime fee” and significant layoffs, but gained $700 million in market value after the surge.
Unity Software (U) saw its stock surge by nearly 10% on Thursday following a cryptic post by Keith Gill, better known as “Roaring Kitty,” on social media platform X. The post, which featured a brief clip of late musician Rick James, sparked enthusiasm among investors and prompted a surge in Unity’s stock price, pushing it as high as $26 on the first trading day of 2025.
Keith Gill’s social media presence has a history of influencing stock prices, as he became widely known during the 2021 meme stock frenzy that led to GameStop’s meteoric rise. Gill, who became a symbol for retail investors during the rally, has since been linked to stock movements that draw the attention of meme stock enthusiasts. His latest post, which referenced a Rick James song titled “Unity,” appears to have reignited similar enthusiasm, particularly among retail investors who tend to follow meme stock trends.
This surge comes at a critical time for Unity Software, which faced a tough year in 2024. The company’s shares fell by nearly 45% last year, following the backlash over its controversial “runtime fee” policy introduced in 2023. The backlash was so severe that Unity had to scrap the pricing model by 2024. Despite this, Unity remains an essential tool for millions of game developers worldwide, powering popular titles like “Pokemon Go,” “Beat Saber,” and “Hearthstone.”
Unity’s challenges were compounded by its decision to lay off about 25% of its workforce in 2024, following 8% job cuts in 2023. These measures were part of Unity’s efforts to focus on profitability amid a difficult market. Yet, the excitement generated by Gill’s post demonstrates the volatility of Unity’s stock and the power of social media in driving investor sentiment.
As Unity gains nearly $700 million in market value from Thursday’s trading gains, industry experts note the role that social media has in shaping stock movements. Art Hogan, chief market strategist at B. Riley Wealth, commented, “The leader of the meme stock post on social media, whether it’s Reddit or X, you’re certainly going to see that reaction by that small army of meme stock players — that’s what we’re seeing again today.” Hogan’s remarks highlight how social media trends continue to impact the stock market, particularly with stocks like Unity, which are viewed as volatile but promising.
Despite the excitement, some industry professionals are wary of the impact of meme stock trading. Thomas Hayes, chairman of Great Hill Capital LLC, cautioned against following trends driven by online communities, saying, “You would think people would have learned by now that playing these silly reindeer games ends in tears … it’s not the way to invest.” Hayes’ remarks reflect concerns about the sustainability of meme stock movements, which are often fueled by speculation rather than fundamentals.
Unity Software’s stock surge is a reminder of the unpredictable nature of meme stock trading, where social media influencers can significantly impact stock prices. While the company’s long-term outlook remains uncertain, Thursday’s surge offers a brief moment of optimism for investors following a challenging year.
Each stock option has an exercise price of $2.25, the closing price of PDS Biotech’s common stock on December 3, 2024. Each stock option vests over a four-year period, with one-quarter of the shares vesting on the first anniversary of the grant date and the remaining shares vesting monthly over the 36-month period thereafter, subject to continued employment with the company through the applicable vesting dates.
About PDS Biotechnology
PDS Biotechnology is a late-stage immunotherapy company focused on transforming how the immune system targets and kills cancers and the development of infectious disease vaccines. The Company plans to initiate a pivotal clinical trial to advance its lead program in advanced HPV16-positive head and neck squamous cell cancers. PDS Biotech’s lead investigational targeted immunotherapy Versamune® HPV is being developed in combination with a standard-of-care immune checkpoint inhibitor, and also in a triple combination including PDS01ADC, an IL-12 fused antibody drug conjugate (ADC), and a standard-of-care immune checkpoint inhibitor.
This communication contains forward-looking statements (including within the meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended) concerning PDS Biotechnology Corporation (the “Company”) and other matters. These statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial condition, or otherwise, based on current beliefs of the Company’s management, as well as assumptions made by, and information currently available to, management. Forward-looking statements generally include statements that are predictive in nature and depend upon or refer to future events or conditions, and include words such as “may,” “will,” “should,” “would,” “expect,” “anticipate,” “plan,” “likely,” “believe,” “estimate,” “project,” “intend,” “forecast,” “guidance”, “outlook” and other similar expressions among others. Forward-looking statements are based on current beliefs and assumptions that are subject to risks and uncertainties and are not guarantees of future performance. Actual results could differ materially from those contained in any forward-looking statement as a result of various factors, including, without limitation: the Company’s ability to protect its intellectual property rights; the Company’s anticipated capital requirements, including the Company’s anticipated cash runway and the Company’s current expectations regarding its plans for future equity financings; the Company’s dependence on additional financing to fund its operations and complete the development and commercialization of its product candidates, and the risks that raising such additional capital may restrict the Company’s operations or require the Company to relinquish rights to the Company’s technologies or product candidates; the Company’s limited operating history in the Company’s current line of business, which makes it difficult to evaluate the Company’s prospects, the Company’s business plan or the likelihood of the Company’s successful implementation of such business plan; the timing for the Company or its partners to initiate the planned clinical trials for Versamune® HPV, PDS01ADC and other Versamune® and Infectimune® based product candidates; the future success of such trials; the successful implementation of the Company’s research and development programs and collaborations, including any collaboration studies concerning Versamune® HPV, PDS01ADC and other Versamune® and Infectimune® based product candidates and the Company’s interpretation of the results and findings of such programs and collaborations and whether such results are sufficient to support the future success of the Company’s product candidates; the success, timing and cost of the Company’s ongoing clinical trials and anticipated clinical trials for the Company’s current product candidates, including statements regarding the timing of initiation, pace of enrollment and completion of the trials (including the Company’s ability to fully fund its disclosed clinical trials, which assumes no material changes to the Company’s currently projected expenses), futility analyses, presentations at conferences and data reported in an abstract, and receipt of interim or preliminary results (including, without limitation, any preclinical results or data), which are not necessarily indicative of the final results of the Company’s ongoing clinical trials; any Company statements about its understanding of product candidates mechanisms of action and interpretation of preclinical and early clinical results from its clinical development programs and any collaboration studies; the Company’s ability to continue as a going concern; and other factors, including legislative, regulatory, political and economic developments not within the Company’s control. The foregoing review of important factors that could cause actual events to differ from expectations should not be construed as exhaustive and should be read in conjunction with statements that are included herein and elsewhere, including the other risks, uncertainties, and other factors described under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in the documents we file with the U.S. Securities and Exchange Commission. The forward-looking statements are made only as of the date of this press release and, except as required by applicable law, the Company undertakes no obligation to revise or update any forward-looking statement, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.
Versamune® and Infectimune® are registered trademarks of PDS Biotechnology Corporation.
Toronto, Ontario–(Newsfile Corp. – January 2, 2025) – Aurania Resources Ltd. (TSXV: ARU) (OTCQB: AUIAF) (FSE: 20Q) (“Aurania” or the “Company”) announces that its directors received their quarterly director fees in the form of stock options in lieu of cash for the period ended December 31, 2024.
Directors (the “Optionees“) of the Company have agreed to receive their quarterly director fees for 2024 in the form of stock options in lieu of cash. On December 31, 2024, each director was granted 13,500 stock options at an exercise price of C$0.425. An aggregate of 54,000 stock options were granted to directors in lieu of their director fees for the fourth financial quarter of 2024.
All such options will be exercisable for a period of three years from the date of grant and vested immediately upon grant. In the event an Optionee intends to exercise such Options, such Optionee shall be solely responsible for paying the entirety of the exercise price.
About Aurania
Aurania is a mineral exploration company engaged in the identification, evaluation, acquisition, and exploration of mineral property interests, with a focus on precious metals and copper in South America. Its flagship asset, The Lost Cities – Cutucu Project, is located in the Jurassic Metallogenic Belt in the eastern foothills of the Andes mountain range of southeastern Ecuador.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SASKATOON, Saskatchewan, Canada, January 2, 2025 – MustGrow Biologics Corp. (TSXV:MGRO) (OTC:MGROF) (FRA:0C0) (the “Company” or “MustGrow“) is pleased to announce the execution and closing of an Asset Purchase Agreement (the “APA“) dated December 31, 2024 with Univar Solutions Canada Ltd. (“Univar Solutions“) for the acquisition of certain assets that represent NexusBioAg (“NexusBioAg“).
MustGrow’s acquisition of NexusBioAg positions the Company as a fully integrated provider of biological and regenerative agriculture solutions with a sales, marketing and distribution division in Canada and the opportunity to expand the division’s operations into the U.S. The consideration payable to Univar Solutions pursuant to the APA is (i) a deferred cash payment of approximately $1,662,000.00, subject to adjustment in accordance with the terms of the APA; and (ii) earn-out payments equal to a specified percentage amount of gross margin on certain itemized products sold by MGRO in 2025 and 2026. There are no finder fees payable in connection with the acquisition and the parties are acting at arm’s length. The TSX Venture Exchange has conditionally approved the acquisition, subject to customary post-closing requirements.
Under MustGrow, this division will market and sell the existing NexusBioAg product lines, MustGrow’s owned products and technology, and potentially other third-party products. The NexusBioAg sales and marketing team brings extensive experience in the biological and regenerative agriculture sector to MustGrow’s operations, supported by a broad industry network that is uniquely positioned to drive growth and innovation. The NexusBioAg team has well-established relationships with growers, channel partners, and industry influencers. They are adept at commercialization of new biological and regenerative products as well as at leveraging a proven business model. The Company expects significant sales synergies from the acquisition driven by enhanced market access and reduced distribution costs for MustGrow’s owned products and technology.
“This synergistic acquisition solidifies MustGrow’s position as a fully integrated biological and regenerative agriculture company with an established sales, marketing and distribution division offering the existing NexusBioAg product lines and supporting the commercialization of MustGrow’s own innovative products and technologies. Just like MustGrow’s own products and technologies, we are committed to growing the NexusBioAg division and we welcome the new team to MustGrow,” said Corey Giasson, President & CEO of MustGrow.
About NexusBioAg
NexusBioAg, a division of MustGrow, provides an expanded portfolio of crop nutrition solutions, including micronutrients, nitrogen stabilizers, biostimulants, and foliar products. With a diverse collection of inventory and logistics experts, procurement, customer service, agronomists, and sales and marketing experts, NexusBioAg strives to help meet increasingly unique agricultural businesses’ needs. Through these strong capabilities, a collaborative team-oriented approach, and a commitment to agricultural integrity, NexusBioAg is helping customers innovate and grow. Learn more at www.nexusbioag.com.
About MustGrow
MustGrow Biologics Corp. is a fully-integrated provider of innovative biological and regenerative agriculture solutions designed to support sustainable farming. The Company’s proprietary and third-party product lines offer eco-friendly alternatives to restricted or banned synthetic chemicals and fertilizers. In North America, MustGrow offers a portfolio of third-party crop nutrition solutions, including micronutrients, nitrogen stabilizers, biostimulants, and foliar products. These products are synergistically distributed alongside MustGrow’s wholly-owned proprietary products and technologies that are derived from mustard and developed into organic biocontrol and biofertility products to help replace banned or restricted synthetic chemicals and fertilizers. Outside of North America, MustGrow is focused on collaborating with agriculture companies, such as Bayer AG in Europe, the Middle East and Africa, to commercialize MustGrow’s wholly-owned proprietary products and technologies. The Company is dedicated to driving shareholder value through on the commercialization and expansion of its intellectual property portfolio of approximately 112 patents that are currently issued and pending, and the sales and distribution of its proprietary and third-party product lines through NexusBioAg. MustGrow is a public traded company (TSXV-MGRO) and has approximately 51.6 million common shares issued and outstanding and 55.7 million shares fully diluted. For further details, please visit www.mustgrow.ca.
Contact Information
Corey Giasson Director & CEO Phone: +1-306-668-2652 info@mustgrow.ca
MustGrow Forward-Looking Statements
Certain statements included in this news release constitute “forward-looking statements” which involve known and unknown risks, uncertainties and other factors that may affect the results, performance or achievements of MustGrow. Generally, forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “expects”, “is expected”, “budget”, “estimates”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might”, “occur” or “be achieved”. Examples of forward-looking statements in this news release include, among others, statements MustGrow makes regarding: the potential expansion of the NexusBioAg division’s operations in the U.S.; the precise quantum of the consideration payable to Univar Solutions pursuant to the APA; whether the NexusBioAg division will market and sell the existing NexusBioAg product lines, MustGrow’s owned products and technology, and potentially other third-party products; and the expected significant sales synergies from the acquisition driven by enhanced market access and reduced distribution costs for MustGrow’s owned products and technology. Forward-looking statements are subject to a number of risks and uncertainties that may cause the actual results of MustGrow to differ materially from those discussed in such forward-looking statements, and even if such actual results are realized or substantially realized, there can be no assurance that they will occur at all or have the expected consequences to, or effects on, MustGrow. Important factors that could cause MustGrow’s actual results and financial condition to differ materially from those indicated in the forward-looking statements include: any required adjustments to the consideration payable to Univar Solutions pursuant to the APA (in accordance with the terms of the APA); the successful integration of the NexusBioAg division into MustGrow’s existing operations; changes to market conditions as a result of lower farm revenues due to lower yield because of weather events or lower crop prices, delayed planting due to weather impacting the application of additional technologies, reduced farm gate cash flow or credit ratings, higher farm input costs due to inflation, supply chain issues in production and shipping, increased competition from new products or lower prices for competing products, retail consolidation in the agribusiness sector, labour market issues, and third party product supply issues; and the risks described in MustGrow’s Annual Information Form for the year ended December 31, 2023 and other continuous disclosure documents filed by MustGrow with the applicable securities regulatory authorities which are available on SEDAR+ at www.sedarplus.ca. Readers are referred to such documents for more detailed information about MustGrow, which is subject to the qualifications, assumptions and notes set forth therein.
Neither the TSXV, nor their Regulation Services Provider (as that term is defined in the policies of the TSXV), nor the OTC Markets has approved the contents of this release or accepts responsibility for the adequacy or accuracy of this release.
Key Points: – U.S. unemployment claims fell to 211,000 last week, the lowest since March, indicating strong job security. – Layoffs remain below pre-pandemic levels, with total unemployment benefits recipients dropping to 1.84 million. – Despite slower job growth, the labor market remains robust, supported by solid hiring and tempered inflation progress.
The U.S. labor market displayed resilience as unemployment claims fell to 211,000 last week, the lowest since March, according to data released by the Labor Department. This 9,000 drop from the previous week underscores strong job security across the country. The four-week average of claims, which smooths out weekly fluctuations, also declined by 3,500 to 223,250, further highlighting the robustness of the employment landscape.
Economists Thomas Simons and Sam Saliba of Jefferies called the decrease “encouraging” while cautioning that seasonal adjustments around the holidays can sometimes skew data. The total number of Americans receiving unemployment benefits fell sharply by 52,000 to 1.84 million, marking the lowest figure since September.
Despite cooling from the pandemic recovery highs of 2021-2023, the job market remains solid. Through November 2024, employers added an average of 180,000 jobs per month—a significant decline from the record 604,000 average in 2021 but still indicative of a resilient market. The Labor Department’s upcoming December hiring report is expected to show an additional 160,000 jobs, maintaining steady, albeit tempered, growth.
Layoffs, as measured by weekly jobless claims, remain below pre-pandemic levels. Although the unemployment rate has risen to 4.2%, up from the historic low of 3.4% in 2023, it remains relatively modest by historical standards.
The Federal Reserve’s aggressive interest rate hikes in 2022 and 2023 successfully brought inflation down from a 40-year high of 9.1% in mid-2022 to 2.7% by November 2024. This progress allowed the Fed to cut its benchmark interest rates three times in 2024. However, with inflationary pressures persisting above the Fed’s 2% target, central bank policymakers have signaled a more cautious approach to further rate reductions in 2025, planning just two cuts compared to the four projected earlier.
Economists note that while the labor market remains healthy, external factors such as geopolitical tensions and global supply chain disruptions could impact future job growth. Additionally, businesses may adopt a more conservative hiring approach in anticipation of potential economic headwinds, particularly if inflation proves difficult to contain.
The continued strength of the job market, however, has provided a buffer against broader economic challenges. Consumer spending, which drives a significant portion of U.S. economic activity, remains resilient, supported by sustained employment and wage growth. Analysts are closely monitoring upcoming economic indicators to assess whether this stability can be maintained into 2025.
While job creation has slowed and inflationary challenges remain, the current labor market conditions reflect stability and adaptability. As the U.S. navigates high interest rates and cooling economic momentum, sustained low levels of layoffs and steady employment growth demonstrate resilience in the face of evolving economic dynamics.
FAT Brands (NASDAQ: FAT) is a leading global franchising company that strategically acquires, markets, and develops fast casual, quick-service, casual dining, and polished casual dining concepts around the world. The Company currently owns 17 restaurant brands: Round Table Pizza, Fatburger, Marble Slab Creamery, Johnny Rockets, Fazoli’s, Twin Peaks, Great American Cookies, Hot Dog on a Stick, Buffalo’s Cafe & Express, Hurricane Grill & Wings, Pretzelmaker, Elevation Burger, Native Grill & Wings, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses, and franchises and owns over 2,300 units worldwide. For more information on FAT Brands, please visit www.fatbrands.com.
Joe Gomes, CFA, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Business Update. With 2024 coming to a close and the focus on the Twin Hospitality distribution, we wanted to review the ongoing business in terms of new openings for additional expansion. As we have emphasized in the past, the continuing expansion of the overall operating units provides a “cost free” means of improving overall adjusted EBITDA for FAT Brands.
New Openings. Since the beginning of November, or since FAT Brands reported third quarter results, the Company has announced the opening of a number of new locations, including a Hurricane Grill & Wings location in a Six Flags Great Escape Lodge in upstate NY, a Johnny Rockets in the Soaring Eagle Casino Resort in MI, a Pretzelmaker location in Clear Lake, IA, the fifth Round Table Pizza in Reno, NV, and five new locations for Great American Cookies and Marble Slab Creamery in Texas.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
Joe Gomes, CFA, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
MSA Underway. On Tuesday, Bit Digital announced the execution of an MSA with an AI Compute Fund managed by DNA Holdings Venture Inc., a new client. The MSA execution builds on the term sheet signed and disclosed on November 20, 2024. The contract provides for 576 Nvidia H200 GPUs over a two-year term and represents an aggregate revenue opportunity of roughly $20.2 million, or $10.1 million annually, and is expected to commence February 2025.
GPUs Ordered. To fulfill the contract, Bit Digital will use GPUs that are currently on order and awaiting delivery to a third-party data center in Iceland. Earlier in December, the Company ordered 130 H200 servers (or 1,040 GPUs) for approximately $30 million. Of those servers, 72 of them will be supplied to the customer, and management expects to deploy the remainder of the servers to separate customer contracts.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
