Author: cpereira@noblefcm.com

Digerati Technologies (DTGI) – Looking Forward Toward 2023

Posted on by cpereira@noblefcm.com


Wednesday, November 02, 2022

Digerati Technologies, Inc. (OTCQB: DTGI) is a provider of cloud services specializing in UCaaS (Unified Communications as a Service) solutions for the business market. Through its operating subsidiaries, T3 Communications (T3com.com), Nexogy (Nexogy.com), SkyNet Telecom (Skynettelecom.net) and NextLevel Internet (nextlevelinternet.com), the Company is meeting the global needs of small businesses seeking simple, flexible, reliable, and cost effective communication and network solutions including cloud PBX, cloud telephony, cloud WAN, cloud call center, cloud mobile, and the delivery of digital oxygen on its broadband network.

Michael Kupinski, Director of Research, Noble Capital Markets, Inc.

Patrick McCann, Research Associate, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

In line Q4 results. The company reported year-over-year revenue growth of 116% to $8.2 million, in line with our forecast. Adj. EBITDA of $284,000 was slightly below our estimate of $560,000, illustrated in Figure #1 Q4 Variance. 

Acquisition integration continues. In our view, the company has not begun fully realizing the synergies of the recent Next Level acquisition, with SG&A expenses once again higher than our forecast. Some of the cost reductions did not happen until later in the quarter. As such, we believe that margins will improve in Q1 and beyond as the 2022 acquisitions become more fully integrated.


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Axcella Therapeutics (AXLA) – 3Q22 Reported After An Eventful Quarter

Posted on by cpereira@noblefcm.com


Wednesday, November 02, 2022

Axcella is a clinical-stage biotechnology company pioneering a new approach to treat complex diseases using compositions of endogenous metabolic modulators (EMMs). The company’s product candidates are comprised of EMMs and derivatives that are engineered in distinct combinations and ratios to restore cellular homeostasis in multiple key biological pathways and improve cellular energetic efficiency. Axcella’s pipeline includes lead therapeutic candidates in Phase 2 development for the treatment of Long COVID and non-alcoholic steatohepatitis (NASH), and the reduction in risk of overt hepatic encephalopathy (OHE) recurrence. The company’s unique model allows for the evaluation of its EMM compositions through non-IND clinical studies or IND clinical trials. For more information, please visit www.axcellatx.com.

Robert LeBoyer, Vice President, Research Analyst, Life Sciences , Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Financial Results.  Axcella reported a 3Q22 loss of $17.8 million or $(0.34) per share, compared with our estimate of a loss of $21.7 million or $(0.43) per share.  The company sold convertible notes raising $6.0 million to end the quarter with $25.4 million in cash and equivalents.  After the quarter ended, it added $28.2 million in cash through a direct offering of common stock.  Based on our 4Q22 estimate of a loss of $18.1 million, we project the cash balance at YE22 to be around $35.5 million.

Long COVID Study Results Were Encouraging.  Results from a Phase 2a study testing AXA1125 in Long COVID were announced in early August, as discussed in our note from August 3. The data showed statistically significant improvements in both physical and mental fatigue symptoms.  We believe this is clinically relevant for an estimated 20% to 30% of the people who have been infected with COVID-19.  Axcella is in currently in discussions with regulatory authorities to design the next study, planned to begin in 2023.


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Alliance Resource Partners (ARLP) – Building Momentum Into 2023 and Beyond

Posted on by cpereira@noblefcm.com


Wednesday, November 02, 2022

ARLP is a diversified natural resource company that generates operating and royalty income from coal produced by its mining complexes and royalty income from mineral interests it owns in strategic oil & gas producing regions in the United States, primarily the Permian, Anadarko and Williston basins. ARLP currently produces coal from seven mining complexes its subsidiaries operate in Illinois, Indiana, Kentucky, Maryland and West Virginia. ARLP also operates a coal loading terminal on the Ohio River at Mount Vernon, Indiana. ARLP markets its coal production to major domestic and international utilities and industrial users and is currently the second largest coal producer in the eastern United States. In addition, ARLP is positioning itself as an energy provider for the future by leveraging its core technology and operating competencies to make strategic investments in the fast growing energy and infrastructure transition.

Mark Reichman, Senior Research Analyst, Natural Resources, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Enviable year-over-year comparisons. Alliance reported third quarter net income of $164.6 million or $1.25 per limited partner unit compared to $57.5 million or $0.44 per limited partner unit during the prior year period. The company generated EBITDA of $250.2 million compared to $135.9 million during the prior year period and free cash flow increased to $244.5 million from $120.5 million. Third quarter financial results reflected higher coal sales prices and volumes which increased 40.5% and 8.1%, respectively, along with greater oil & gas royalty prices and volumes which rose 31.6% and 33.1%. Compared to the prior year period, consolidated revenues increased 51.3% to $628.4 million.

Updating estimates. We have made several adjustments to our model to reflect updated 2022 guidance, along with estimated distributions to and undistributed earnings attributable to participating securities. We have lowered our 2022 EBITDA and adjusted EPU estimates to $919.1 million and $4.48, respectively, from $945.3 million and $4.85. We lifted our 2023 EPU and EBITDA estimates to $5.85 and $1.116 billion, respectively, from $5.75 and $1.077 billion. Looking ahead to 2023, Alliance expects to boost coal sales by roughly two million tons and expects coal pricing per ton to increase by roughly 10% compared to the 2022 average. Within the oil and gas royalty segment, volumes are expected to benefit from two recent acquisitions that added 1,200 producing wells, 101 wells to be completed and 98 permitted locations on the acquired acreage.


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Sierra Metals (SMTS) – The Plot Thickens

Posted on by cpereira@noblefcm.com


Tuesday, November 01, 2022

Sierra Metals Inc. is a diversified Canadian mining company with Green Metal exposure including increasing copper production and base metal production with precious metals byproduct credits, focused on the production and development of its Yauricocha Mine in Peru, and Bolivar and Cusi Mines in Mexico. The Company is focused on increasing production volume and growing mineral resources. Sierra Metals has recently had several new key discoveries and still has many more exciting brownfield exploration opportunities at all three Mines in Peru and Mexico that are within close proximity to the existing mines. Additionally, the Company also has large land packages at all three mines with several prospective regional targets providing longer-term exploration upside and mineral resource growth potential.

Mark Reichman, Senior Research Analyst, Natural Resources, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Sierra receives an unsolicited transaction proposal. Sierra Metals recently received an unsolicited, non-binding letter of intent (LOI) from Compania Minera Kolpa S.A. (Kolpa) outlining indicative terms for a proposed merger with Sierra Metals and a concurrent financing by an unaffiliated investment firm. Kolpa is a private mining company that operates the polymetallic Huachocolpa Uno underground mine in Peru with capacity of 1,800 tonnes per day. The transaction is supported by affiliates of Arias Resource Capital, Sierra’s largest shareholder, that collectively own approximately 27% of Sierra’s issued and outstanding shares. Kolpa shareholders supporting the transaction proposal include Arias Resource Capital Fund II L.P., Arias Resource Capital Fund II (Mexico) L.P., and GR Holding S.A.

Transaction basics. While specifics remain to be disclosed and could change, the proposed transaction would be an operational merger of Kolpa and Sierra assets in Peru, following a business combination that would result in Sierra owning all the shares or assets of Kolpa. Concurrent with the transaction, Kolpa’s financing partner proposes to purchase unsecured convertible debentures that would be convertible into common shares of Sierra.


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Aurania Resources (AUIAF) – Laying the Groundwork for Drilling

Posted on by cpereira@noblefcm.com


Tuesday, November 01, 2022

Mark Reichman, Senior Research Analyst, Natural Resources, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Private placement financing. Aurania Resources announced a non-brokered private placement financing of up to 4,444,444 units at a price of C$0.45 per unit for gross proceeds of up to C$2,000,000. Each unit will consist of one common share and one common share purchase warrant. Each warrant will entitle the holder to purchase one share for C$0.75 per warrant for a period of 24 months. Proceeds will be used to fund drilling and exploration activities and general working capital. Closing is subject to receipt of approvals, including from the TSX Venture Exchange.

Drilling to commence shortly. Detailed interpretation of the “Anaconda Method” mapping program at Aurania’s Tatasham porphyry target in southeastern Ecuador is nearing completion and the first few drill holes are being defined for a drill program expected to begin in the latter half of November or early December 2022, with drilling at the Awacha target to follow. 


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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. 

RCI Hospitality Holdings (RICK) – New Year, New Club

Posted on by cpereira@noblefcm.com


Monday, October 31, 2022

With more than 60 units, RCI Hospitality Holdings, Inc., through its subsidiaries, is the country’s leading company in adult nightclubs and sports bars/restaurants. Clubs in New York City, Chicago, Dallas-Fort Worth, Houston, Miami, Minneapolis, Denver, St. Louis, Charlotte, Pittsburgh, Raleigh, Louisville, and other markets operate under brand names such as Rick’s Cabaret, XTC, Club Onyx, Vivid Cabaret, Jaguars Club, Tootsie’s Cabaret, Scarlett’s Cabaret, Diamond Cabaret, and PT’s Showclub. Sports bars/restaurants operate under the brand name Bombshells Restaurant & Bar.

Joe Gomes, Senior Research Analyst, 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.

Keeps Getting Clubs. RCI Hospitality announced last week the acquisition of Heartbreakers Adult Nightclub for $9 million. The 5-stage, 23,000 square foot Heartbreakers club is located at 3200 Gulf Freeway, Dickinson, TX, and the Company acquired the club using $4.0 million in cash and $5.0 million in a 15-year, 6% real estate seller financing note. The Company did not release any financials for the club but we would expect the price to be within RCI’s 3-5x adjusted EBITDA for the club.

Area Around the Club. Dickinson, Texas had a population of 20,870 in 2020 according to Data USA with a median household income of $70,468. The median household income is a positive for RICK in our view as it is higher than the median income in the United States ($67,521), which we believe provides the Company with higher spending customers as the population has higher disposable income. The location of the club is also a positive due to it being near a freeway, which provides visibility to potential customers. Established in 1986, Heartbreakers is the number one adult entertainment venue in the Galveston, Texas, area.


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Orion Group Holdings (ORN) – Post Call Commentary

Posted on by cpereira@noblefcm.com


Monday, October 31, 2022

Joe Gomes, Senior Research Analyst, 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.

Why ORN? We believe the new management team, with its relevant industry experience, sees the robust end markets and opportunities to build the business, both organically and inorganically. We believe Orion is uniquely positioned to capitalize on the extraordinary market potential, both in the Marine sector and the Concrete business.

Near-term: Picking Low Hanging Fruit.  While the new management team sets a course for the business, they are taking advantage of low hanging fruit to improve near-term operational results, such as continued improvement in contracts and reducing overhead burden.


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Cumulus Media (CMLS) – Economic Headwinds Prevail

Posted on by cpereira@noblefcm.com


Monday, October 31, 2022

Cumulus Media (NASDAQ: CMLS) is an audio-first media company delivering premium content to over a quarter billion people every month — wherever and whenever they want it. Cumulus Media engages listeners with high-quality local programming through 406 owned-and-operated radio stations across 86 markets; delivers nationally-syndicated sports, news, talk, and entertainment programming from iconic brands including the NFL, the NCAA, the Masters, CNN, the AP, the Academy of Country Music Awards, and many other world-class partners across more than 9,500 affiliated stations through Westwood One, the largest audio network in America; and inspires listeners through the Cumulus Podcast Network, its rapidly growing network of original podcasts that are smart, entertaining and thought-provoking. Cumulus Media provides advertisers with personal connections, local impact and national reach through broadcast and on-demand digital, mobile, social, and voice-activated platforms, as well as integrated digital marketing services, powerful influencers, full-service audio solutions, industry-leading research and insights, and live event experiences. Cumulus Media is the only audio media company to provide marketers with local and national advertising performance guarantees. For more information visit www.cumulusmedia.com.

Michael Kupinski, Director of Research, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Favorable Q3 results. The company reported Q3 revenue of $233.5 million, just above our expectation of $230 million.  Despite revenue decreasing 2% from the previous quarter Adj. EBITDA grew by 1.6% to $46.6 million beating our forecast of $41.7 million by 11.7%. 

Lowers guidance. Q4 revenue is expected to decline low to mid single digits in spite of influx of Political advertising, which too appears softer than expected. Local advertising appears to have softened, which implies that local businesses are now feeling the affect of the economic headwinds. Management lowered Adj. EBITDA guidance from a range of $175 million to $200 million to a range of $160 million to $170 million. 


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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. 

Tokens.com Corp. (SMURF) – Hulks Labs Achieves a Milestone

Posted on by cpereira@noblefcm.com


Friday, October 28, 2022

Tokens.com Corp is a publicly traded company that invests in Web3 assets and businesses focused on the Metaverse, NFTs, DeFi, and gaming based digital assets. Tokens.com is the majority owner of Metaverse Group, one of the world’s first virtual real estate companies. Hulk Labs, a wholly-owned Tokens.com subsidiary, focuses on investing in play-to-earn revenue generating gaming tokens and NFTs. Additionally, Tokens.com owns and stakes crypto assets to earn additional tokens. Through its growing digital assets and NFTs, Tokens.com provides public market investors with a simple and secure way to gain exposure to Web3.

Joe Gomes, Senior Research Analyst, 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.

Getting More Players. On Wednesday, Tokens.com announced the Company’s subsidiary Hulk Labs has integrated over 1,000 players into its network, with the primary focus being in Africa which includes Tanzania, South Africa, and the Democratic Republic of Congo. The waitlist of players to join the network is over 3,000 and the Company expects to add hundreds of players each month, with the target of getting to 10,000 players by the end of 2023. Hulk Labs has initially allocated over USD$100,000 into gaming assets for the network, and its top gaming titles, Crabada and Thetan Arena, are returning 18-24% per month in revenue.

A New Software? A potential addition to revenue, a new software is being tested that will allow investors to connect to players, and the Company will receive a commission based on the revenue earned. We expect the software to be implemented over time, but add to top-line revenue once fully integrated, as investors are already gauging an interest in the software.


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The GEO Group (GEO) – Stacking Up Another Solid Quarter

Posted on by cpereira@noblefcm.com


Friday, October 28, 2022

The GEO Group, Inc. (NYSE: GEO) is a leading diversified government service provider, specializing in design, financing, development, and support services for secure facilities, processing centers, and community reentry centers in the United States, Australia, South Africa, and the United Kingdom. GEO’s diversified services include enhanced in-custody rehabilitation and post-release support through the award-winning GEO Continuum of Care®, secure transportation, electronic monitoring, community-based programs, and correctional health and mental health care. GEO’s worldwide operations include the ownership and/or delivery of support services for 103 facilities totaling approximately 83,000 beds, including idle facilities and projects under development, with a workforce of up to approximately 18,000 employees.

Joe Gomes, Senior Research Analyst, 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.

3Q22 Results. GEO once again posted solid operating results for 3Q22. Revenue for the quarter came in at $616.7 million, up from $557.3 million a year ago. Adjusted EBITDA totaled $136.2 million, AFFO was $0.60 per diluted share, EPS was $0.26, and adjusted net income $0.33 per share. In the year ago period, GEO reported $116.0 million, $0.65, $0.24, and $0.35, respectively. We had forecast $605 million, $132 million, $0.55, $0.35, and $0.35, respectively. GEO’s results highlight the resiliency of the business model, in our opinion.

BI Continues to Impress. GEO BI electronic monitoring subsidiary continues to show impressive growth. Segment 3Q22 revenue increased to $137 million up from $121.5 million in 2Q22. Through the first nine months of 2022, electronic monitoring and supervision revenue increased to $346.4 million, up from $278.9 million in all of 2021.


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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. 

Cypress Development (CYDVF) – Details Emerge as the Clayton Valley Feasibility Study Takes Shape

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Friday, October 28, 2022

Mark Reichman, Senior Research Analyst, Natural Resources, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Another box checked. Cypress Development selected thyssenkrupp nucera USA, Inc. to provide the design and engineering for the chlor-alkali plant as it advances its Clayton Valley Lithium Project in Nevada. The chlor-alkali plant will enable the project to produce two key reagents, hydrochloric acid and sodium hydroxide, required for processing lithium-bearing claystone through to a lithium carbonate product. The company’s selection of thyssenkrupp nucera represents another step towards completion of the feasibility study in the second quarter of 2023.

Feasibility study is taking shape. Work on the feasibility study commenced in March under the direction of Wood PLC and is advancing as planned. Wood, along with support from others, has completed or is nearing completion of several items, including resource and reserve estimates, mine plan, processing plant design, and tailings and waste storage facilities.


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Travelzoo (TZOO) – Are We On The Runway Or Still At The Gate?

Posted on by cpereira@noblefcm.com


Thursday, October 27, 2022

Travelzoo® provides its 30 million members with exclusive offers and one-of-a-kind experiences personally reviewed by our deal experts around the globe. We have our finger on the pulse of outstanding travel, entertainment, and lifestyle experiences. We work in partnership with more than 5,000 top travel suppliers—our long-standing relationships give Travelzoo members access to irresistible deals.

Michael Kupinski, Director of Research, Noble Capital Markets, Inc.

Jacob Mutchler, Research Associate, Noble Capital Markets, Inc.

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Misses Fiscal Q3. Revenues increased a modest 1% to $15.8 million, versus our $18.0 million estimate. On a constant currency basis, revenues increased 6% to $16.7 million. Adj. EBITDA missed our estimate, $1.1 million versus our $2.7 million estimate, largely due to lower than expected gross profit margins, which were over 200 basis points lower than expected.

Business too good? Management indicated that the recent results were impacted by a strong rebound in travel, which increased occupancy rates and at very high prices. As such, travel related businesses did not need to advertise and they were unwilling to provide discounted “deals”. This was a consistent message from the “miss” in the second quarter, as well.


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PDS Biotechnology Corp (PDSB) – KOL Event Held To Discuss Head and Neck Cancer

Posted on by cpereira@noblefcm.com


Thursday, October 27, 2022

PDS Biotech is a clinical-stage immunotherapy company developing a growing pipeline of molecularly targeted cancer and infectious disease immunotherapies based on the Company’s proprietary Versamune® and Infectimune™ T-cell activating technology platforms. Our Versamune®-based products have demonstrated the potential to overcome the limitations of current immunotherapy by inducing in vivo, large quantities of high-quality, highly potent polyfunctional tumor specific CD4+ helper and CD8+ killer T-cells. PDS Biotech has developed multiple therapies, based on combinations of Versamune® and disease-specific antigens, designed to train the immune system to better recognize diseased cells and effectively attack and destroy them. The Company’s pipeline products address various cancers including HPV16-associated cancers (anal, cervical, head and neck, penile, vaginal, vulvar) and breast, colon, lung, prostate and ovarian cancers.

Robert LeBoyer, Vice President, Research Analyst, Life Sciences , Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Roundtable Discussion of Head and Neck Cancer.  PDS Biotech held a Head and Neck Cancer Roundtable with KOLs to discuss treatments and PDS0101.  Although no new data was released, there was a discussion of the cancer, its prognosis, the drugs, and adverse events that showed the need for a new treatment like PDS0101.

Head and Neck Cancer Discussion Included Incidence and Market Size.  The presentations discussed the patient population, current drugs, survival and recurrence rates.  Newly diagnosed cases of head and neck cancer are often associated with HPV, in contrast to previous generations when it was associated with tobacco and alcohol.  Although vaccinations against HPV have  been introduced, millions have been already been exposed so that incidence is expected to rise in the coming decades.


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