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Industry report energy sector review and outlook

Posted on April 2, 2020May 4, 2022 by Admin

Thursday, April 2, 2020

Energy Industry Report

Energy Sector Review and Outlook

Michael Heim, CFA, Senior Research Analyst, Noble Capital Markets, Inc.

Listen To The Analyst

Refer to end of report for Analyst Certification & Disclosures

Energy investors looking for relief in 2020 drilled a dry hole. The dual impact of the Coronavirus and a Saudi Arabia oil price war sent oil prices crashing down and with them, energy stocks. The XLE Energy Index fell 52% in the quarter ending March 31, far outpacing a 22% decline for the S&P 500 Index.
Energy prices drop even further. West Texas Intermediate (WTI) oil prices for the May 2020 futures contract began the year at $61.18 per barrel and finished the quarter at $20.13 per barrel, down 67%. Henry Hub natural gas prices for the May 2020 futures contract fared a bit better dropping 25% to a level of $1.60 per thousand cubic feet (mcf).
A supply response is coming but it might not be in time to save small energy companies. Needless to say, oil prices in the twenties is disastrous for domestic energy companies. Many companies claim to be able to break even at oil prices in the forties. Without an improvement in oil prices, many U.S. producers could be headed towards bankruptcy at a rate similar to what happened in 2016.
Be selective but values are out there. We believe investors should continue to be wary regarding energy stocks and focus on companies with good balance sheets. That said, there are compelling values within the group now that individual stock prices have fallen. We continue to believe energy prices will eventually return to higher levels with a return to more normal economic conditions and a supply response by domestic producers. We have adjusted our long-term oil and gas price assumption to $50/bbl and $2.50/mcf respectively, although we believe it may be several years before we reach those levels.

Exploration and Production: 2020-1Q Review and Outlook

Energy investors looking for relief in 2020 drilled a dry hole. The dual impact of the Coronavirus and a Saudi Arabia oil price war sent oil prices crashing down and with them, energy stocks. The XLE Energy Index fell 52% in the quarter ending March 31, far outpacing a 22% decline for the S&P 500 Index. West Texas Intermediate (WTI) oil prices for the May 2020 futures contract began the year at $61.18 per barrel and finished the quarter at $20.13 per barrel, down 67%. Henry Hub natural gas prices for the May 2020 futures contract fared a bit better dropping 25% to a level of $1.60 per thousand cubic feet (mcf).

The Coronavirus and its resulting global economic slowdown will undoubtedly lead to a decrease in the demand for oil. Highways are empty, airlines are shutting down and factories are closing. Estimates for the impact range from a decline of 2.5 million barrels of oil per day (MBOE/d) to 12 MBOE/d. The upper end of the range would represent a 12% reduction in demand from pre-virus levels near 80 MBOE/d. This is demand that will be gone forever, not just pushed back into future quarters.

Complicating issues is the fact that Saudi Arabia and Russia are flooding the market with excess oil. On March 6th, the bottom fell out when OPEC and Russia failed to agree to a production cut, and Saudi Arabia signaled it might ramp up production. WTI prices fell $10.15 per barrel, or 24.59% to a level near $30 per barrel. The decline marked the second biggest one-day decline on record and the largest since 1991. Since March 6^th, oil prices have continued to slide as the Energy Information Administration (EIA) reports a growing stock of crude oil in storage.

Outlook

Needless to say, oil prices in the twenties is disastrous for domestic energy companies. Many companies claim to be able to break even at oil prices in the forties. However, none claim to be able to do so at prices in the twenties. We have said in the past that U.S. producers have become the producers on margin. They will be the first to react to changes in oil prices by adjusting drilling. Already, many companies have announced that they have cancelled their drilling programs.

The United States has grown to become the largest producer of oil at 11 MBOE/d. It has done so through horizontal drilling and fracking that accelerates initial production rates. These techniques, however, also lead to sharper declines if new wells are not drilled. Without new drilling, U.S. production could quickly slip back towards the 6 MBOE/day level of just ten years ago.

What is most disturbing about the recent drop in oil prices is that the market does not view the drop as temporary. Looking at future month contracts, prices rise very slowly. That means that the market believes Saudi Arabia is not bluffing about raising production and that OPEC and Russia wonâ€™t reach an agreement to cut production. It also means the market believes the impact of the Coronavirus may continue well into the future. It also means the market does not believe that there will be a quick supply response by U.S. producers.

U.S. producers can withstand temporary dips into the forties, thirties or even twenties. Many companies hedged part of their production when oil prices rose last year. Two years of oil prices below $40 would be another story. Companies have operating and financial costs to consider. Companies that have tapped their lines of credit could see that credit reduced or eliminated leaving management with few options now that energy stock prices have fallen. Without an improvement in oil prices, many U.S. producers could be headed towards bankruptcy at a rate similar to what happened in 2016.

Recommendations

We believe investors should continue to be wary regarding energy stocks. Investors would be wise to focus energy investment towards companies with little to no debt. A large hedge position may provide a lifeline. Low lifting costs per barrel remain important. A supportive ownership group with a long investment time frame is also important.

That said, there are compelling values within the group now that individual stock prices have fallen. We continue to believe energy prices will eventually return to higher levels with a return to more normal economic conditions and a supply response by domestic producers. We have adjusted our long-term oil and gas price assumption to $50/bbl and $2.50/mcf respectively, although we believe it may be several years before we reach those levels. Our individual stock net asset values and price targets are based off of our long-term energy price assumptions.

GENERAL DISCLAIMERS

All statements or opinions contained herein that include the words “we”, “us”, or “our” are solely the responsibility of Noble Capital Markets, Inc.(“Noble”) and do not necessarily reflect statements or opinions expressed by any person or party affiliated with the company mentioned in this report. Any opinions expressed herein are subject to change without notice. All information provided herein is based on public and non-public information believed to be accurate and reliable, but is not necessarily complete and cannot be guaranteed. No judgment is hereby expressed or should be implied as to the suitability of any security described herein for any specific investor or any specific investment portfolio. The decision to undertake any investment regarding the security mentioned herein should be made by each reader of this publication based on its own appraisal of the implications and risks of such decision.

This publication is intended for information purposes only and shall not constitute an offer to buy/sell or the solicitation of an offer to buy/sell any security mentioned in this report, nor shall there be any sale of the security herein in any state or domicile in which said offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or domicile. This publication and all information, comments, statements or opinions contained or expressed herein are applicable only as of the date of this publication and subject to change without prior notice. Past performance is not indicative of future results. Noble accepts no liability for loss arising from the use of the material in this report, except that this exclusion of liability does not apply to the extent that such liability arises under specific statutes or regulations applicable to Noble. This report is not to be relied upon as a substitute for the exercising of independent judgement. Noble may have published, and may in the future publish, other research reports that are inconsistent with, and reach different conclusions from, the information provided in this report. Noble is under no obligation to bring to the attention of any recipient of this report, any past or future reports. Investors should only consider this report as single factor in making an investment decision.

IMPORTANT DISCLOSURES

This publication is confidential for the information of the addressee only and may not be reproduced in whole or in part, copies circulated, or discussed to another party, without the written consent of Noble Capital Markets, Inc. (“Noble”). Noble seeks to update its research as appropriate, but may be unable to do so based upon various regulatory constraints. Research reports are not published at regular intervals; publication times and dates are based upon the analyst’s judgement. Noble professionals including traders, salespeople and investment bankers may provide written or oral market commentary, or discuss trading strategies to Noble clients and the Noble proprietary trading desk that reflect opinions that are contrary to the opinions expressed in this research report.
The majority of companies that Noble follows are emerging growth companies. Securities in these companies involve a higher degree of risk and more volatility than the securities of more established companies. The securities discussed in Noble research reports may not be suitable for some investors and as such, investors must take extra care and make their own determination of the appropriateness of an investment based upon risk tolerance, investment objectives and financial status.

Company Specific Disclosures

The following disclosures relate to relationships between Noble and the company (the “Company”) covered by the Noble Research Division and referred to in this research report.
Noble is not a market maker in any of the companies mentioned in this report. Noble intends to seek compensation for investment banking services and non-investment banking services (securities and non-securities related) with any or all of the companies mentioned in this report within the next 3 months

ANALYST CREDENTIALS, PROFESSIONAL DESIGNATIONS, AND EXPERIENCE

Senior Equity Analyst focusing on Basic Materials & Mining. 20 years of experience in equity research. BA in Business Administration from Westminster College. MBA with a Finance concentration from the University of Missouri. MA in International Affairs from Washington University in St. Louis.
Named WSJ ‘Best on the Street’ Analyst and Forbes/StarMine’s “Best Brokerage Analyst.”
FINRA licenses 7, 24, 63, 87

WARNING

This report is intended to provide general securities advice, and does not purport to make any recommendation that any securities transaction is appropriate for any recipient particular investment objectives, financial situation or particular needs. Prior to making any investment decision, recipients should assess, or seek advice from their advisors, on whether any relevant part of this report is appropriate to their individual circumstances. If a recipient was referred to Noble Capital Markets, Inc. by an investment advisor, that advisor may receive a benefit in respect of
transactions effected on the recipients behalf, details of which will be available on request in regard to a transaction that involves a personalized securities recommendation. Additional risks associated with the security mentioned in this report that might impede achievement of the target can be found in its initial report issued by Noble Capital Markets, Inc.. This report may not be reproduced, distributed or published for any purpose unless authorized by Noble Capital Markets, Inc..

RESEARCH ANALYST CERTIFICATION

Independence Of View
All views expressed in this report accurately reflect my personal views about the subject securities or issuers.

Receipt of Compensation
No part of my compensation was, is, or will be directly or indirectly related to any specific recommendations or views expressed in the public
appearance and/or research report.

Ownership and Material Conflicts of Interest
Neither I nor anybody in my household has a financial interest in the securities of the subject company or any other company mentioned in this report.

NOBLE RATINGS DEFINITIONS	% OF SECURITIES COVERED	% IB CLIENTS
Outperform: potential return is >15% above the current price	93%	48%
Market Perform: potential return is -15% to 15% of the current price	7%	6%
Underperform: potential return is >15% below the current price	0%	0%

NOTE: On August 20, 2018, Noble Capital Markets, Inc. changed the terminology of its ratings (as shown above) from “Buy” to “Outperform”, from “Hold” to “Market Perform” and from “Sell” to “Underperform.” The percentage relationships, as compared to current price (definitions), have remained the same. Additional information is available upon request. Any recipient of this report that wishes further information regarding the subject company or the disclosure information mentioned herein, should contact Noble Capital Markets, Inc. by mail or phone.

Noble Capital Markets, Inc.
225 NE Mizner Blvd. Suite 150
Boca Raton, FL 33432
561-994-1191

Noble Capital Markets, Inc. is a FINRA (Financial Industry Regulatory Authority) registered broker/dealer.
Noble Capital Markets, Inc. is an MSRB (Municipal Securities Rulemaking Board) registered broker/dealer.
Member – SIPC (Securities Investor Protection Corporation)
Report ID: 11365

Research acco brands corporation acco the store is on sale

Posted on April 2, 2020May 4, 2022 by Admin

Thursday, April 2, 2020

ACCO Brands Corporation (ACCO)

The Store is on Sale

ACCO Brands Corporation designs, manufactures, sources, markets, and sells office products, academic supplies, and calendar products primarily in the United States, Canada, Northern Europe, Brazil, Australia, and Mexico. It operates through three segments: ACCO Brands North America, ACCO Brands EMEA, and ACCO Brands International. The company offers office products, such as stapling, binding and laminating equipment, and related consumable supplies, as well as shredders and whiteboards; and academic products, including notebooks, folders, decorative calendars, and stationery products. It also provides private label products, as well as business machine maintenance and repair services. The company offers its business, academic, and calendar product lines under the Artline, AT-A-GLANCE, Derwent, Esselte, Five Star, GBC, Hilroy, Leitz, Marbig, Mead, NOBO, Quartet, Rapid, Rexel, Swingline, Tilibra, Wilson Jones, and other brand names. In addition, it designs, sources, distributes, markets, and sells accessories for laptop and desktop computers, and tablets comprising security products; input devices, such as presenters, mice, and trackballs; ergonomic aids, including foot and wrist rests; docking stations; and other personal computers and tablet accessories under the Kensington, Microsaver, and ClickSafe brand names. The company sells its products to consumers and commercial end-users primarily through resellers, including traditional office supply resellers, wholesalers, mass merchandisers, and retailers, as well as directly to consumers through on-line and direct mail. ACCO Brands Corporation is headquartered in Lake Zurich, Illinois.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

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

Compelling Risk/Reward. At a sub-$5 price, ACCO shares present investors a compelling risk/reward opportunity, in our view. While we admit to the futility of attempting to model the breadth and depth of the coronavirus impact on the financials, we ran a “What If” scenario using reduced revenue for 2020 and the adjusted EBITDA margin from 2009, during the Great Recession, which was the lowest adjusted EBITDA margin in the past 11 years, by far, some 320 basis points below the subsequent 10-year average margin.

The Results. Under our “What If’ analysis, the results indicate that even under these stressed conditions, at our $14 price target ACCO shares would continue to trade at a discount to its peer group of consumer branded product companies on both an EV/S and…

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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.

Research great panther mining limited gpl positioning tucano to reach its full potential

Posted on April 2, 2020May 4, 2022 by Admin

Thursday, April 2, 2020

Great Panther Mining Limited (GPL)

Positioning Tucano to Reach its Full Potential

Great Panther Mining Limited, headquartered in Vancouver, Canada, is a precious metals mining and exploration company that operates three mines. These include: 1) the Tucano gold mine in Amapa State, Brazil, 2) the Guanajuato mine complex which includes the Guanajuato and San Ignacio mines in Mexico, and 3) the Topia mine in Mexico. Great Panther also owns the Coricancha Mine in Peru, which is expected to restart operations in 2020. The shares are traded under the ticker “GPR” on the Toronto Stock Exchange and under the ticker “GPL” on the NYSE American.

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

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

GPL reports full year 2019 results. GPL reported a full year net loss of $91.0 million, or ($0.33) per share, compared to our estimate of $29.8 million, or ($0.11) per share. The variance to our estimate was due, in part, to an impairment of goodwill associated with the Tucano mine. Full year adjusted EBITDA amounted to $7.9 million.

Updating estimates. We project 2020 EPS and EBITDA of $0.03 and $62.2 million, respectively. While EPS is unchanged, EBITDA is down modestly from our prior estimate of $63.8 million. We are initiating 2021 EPS and EBITDA estimates of $0.10 and $87.0 million, respectively. While Great Panther has had its share of operating challenges, we believe 2020 could be a transition year to…

Click here to get the full report.

This research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

Industry Report – Energy Sector Review and Outlook

Posted on April 2, 2020 by Admin

Thursday, April 2, 2020

Energy Industry Report

Energy Sector Review and Outlook

Michael Heim, CFA, Senior Research Analyst, Noble Capital Markets, Inc.

Listen To The Analyst

Refer to end of report for Analyst Certification & Disclosures

Energy investors looking for relief in 2020 drilled a dry hole. The dual impact of the Coronavirus and a Saudi Arabia oil price war sent oil prices crashing down and with them, energy stocks. The XLE Energy Index fell 52% in the quarter ending March 31, far outpacing a 22% decline for the S&P 500 Index.
Energy prices drop even further. West Texas Intermediate (WTI) oil prices for the May 2020 futures contract began the year at $61.18 per barrel and finished the quarter at $20.13 per barrel, down 67%. Henry Hub natural gas prices for the May 2020 futures contract fared a bit better dropping 25% to a level of $1.60 per thousand cubic feet (mcf).
A supply response is coming but it might not be in time to save small energy companies. Needless to say, oil prices in the twenties is disastrous for domestic energy companies. Many companies claim to be able to break even at oil prices in the forties. Without an improvement in oil prices, many U.S. producers could be headed towards bankruptcy at a rate similar to what happened in 2016.
Be selective but values are out there. We believe investors should continue to be wary regarding energy stocks and focus on companies with good balance sheets. That said, there are compelling values within the group now that individual stock prices have fallen. We continue to believe energy prices will eventually return to higher levels with a return to more normal economic conditions and a supply response by domestic producers. We have adjusted our long-term oil and gas price assumption to $50/bbl and $2.50/mcf respectively, although we believe it may be several years before we reach those levels.

Exploration and Production: 2020-1Q Review and Outlook

Outlook

Recommendations

RESEARCH ANALYST CERTIFICATION

Independence Of View
All views expressed in this report accurately reflect my personal views about the subject securities or issuers.

Ownership and Material Conflicts of Interest
Neither I nor anybody in my household has a financial interest in the securities of the subject company or any other company mentioned in this report.

NOBLE RATINGS DEFINITIONS	% OF SECURITIES COVERED	% IB CLIENTS
Outperform: potential return is >15% above the current price	93%	48%
Market Perform: potential return is -15% to 15% of the current price	7%	6%
Underperform: potential return is >15% below the current price	0%	0%

Noble Capital Markets, Inc.
225 NE Mizner Blvd. Suite 150
Boca Raton, FL 33432
561-994-1191

Research – ACCO Brands Corporation (ACCO) – The Store is on Sale

Posted on April 2, 2020 by Admin

Thursday, April 2, 2020

ACCO Brands Corporation (ACCO)

The Store is on Sale

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

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

Click here to get the full report.

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

Research – Great Panther Mining Limited (GPL) – Positioning Tucano to Reach its Full Potential

Posted on April 2, 2020 by Admin

Thursday, April 2, 2020

Great Panther Mining Limited (GPL)

Positioning Tucano to Reach its Full Potential

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

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

Click here to get the full report.

This research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

Research dyadic international inc- dyai q4 2019 constructive 2019 leading to a promising year ahead

Posted on April 1, 2020May 4, 2022 by Admin

Wednesday, April 1, 2020

Dyadic International Inc. (DYAI)

Q4 2019: Constructive 2019 Leading to a Promising Year Ahead

Dyadic International, Inc. is a global biotechnology company which is developing what it believes will be a potentially significant biopharmaceutical gene expression platform based on the industrially proven hyper productive engineered fungus Thermothelomyces heterothallica (formerly Myceliophthora thermophila), named C1.
The C1 microorganism, which enables the development and large scale manufacture of low cost proteins, has the potential to be further developed into a safe and efficient expression system that may help speed up the development, lower production costs and improve the performance of biologic vaccines and drugs at flexible commercial scales. Dyadic is using the C1 technology and other technologies to conduct research, development and commercial activities for the development and manufacturing of human and animal vaccines and drugs, such as virus like particles (VLPs) and antigens, monoclonal antibodies, Fab antibody fragments, Fc-Fusion proteins, biosimilars and/or biobetters, and other therapeutic proteins. Dyadic pursues research and development collaborations, licensing arrangements and other commercial opportunities with its partners and collaborators to leverage the value and benefits of these technologies in development and manufacture of biopharmaceuticals. In particular, as the aging population grows in developed and undeveloped countries, Dyadic believes the C1 technology may help bring biologic vaccines, drugs and other biologic products to market faster, in greater volumes, at lower cost, and with new properties to drug developers and manufacturers, and improve access and cost to patients and the healthcare system, but most importantly save lives.

Ahu Demir, Senior Research Analyst, Noble Capital Markets, Inc.

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

2019 financial results were in line with expectations. Dyadic International Inc. (DYAI) released the full year of 2019 financial and operational results. The company reported $10.1 million in total expenses. The net loss was $8.3 million or $0.31 per share compared to a net loss of $5.7 million or $0.21 per share in 2018. Our F2019 estimates were for a net loss of $8.8 million and EPS of ($0.31). For F2020 and F2021, we forecast revenue of $1.8 mm, and $1.9 mm, and EPS of ($0.32) and ($0.34), respectively.

Not a month passes without adding another partnership to the pipeline. Dyadic’s business development flow continues by establishing research collaboration with large pharmaceuticals, institutions and biotechnology firms to validate C1 technology in biologics for human and animal health. The company has maintained a low cash-burn while increasing the probability of success of C1 technology’s potential in…

Click here to get the full report.

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

Research great lakes dredge dock gldd volatile quarter but favorable outlook intact

Posted on April 1, 2020May 4, 2022 by Admin

Wednesday, April 1, 2020

Great Lakes Dredge & Dock (GLDD)

Volatile Quarter But Favorable Outlook Intact

Great Lakes Dredge & Dock Corp is a provider of dredging services in the United States. The company only’s operating segments is Dredging. Dredging involves the enhancement or preservation of navigability of waterways or the protection of shorelines through the removal or replenishment of soil, sand or rock. Its projects portfolio includes Coastal Restoration, Coastal Protection, Port expansion, and others.

Poe Fratt, Senior Research Analyst, Noble Capital Markets, Inc.

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

No change in dredging market outlook We believe that the widespread disruption caused by the Coronavirus will have a minimal impact since dredging is defined as an essential service, per advisories from the Department of Homeland Security (DHS).

Adjusting year to date awards to $71.6 million. Our previous note included a $14 million job that was awarded at year-end 2019, not this year. More than $100 million of low bids pending award remain outstanding, and the next phase of stimulus seems likely to be…

Click here to get the full report.

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

Research sierra metals smts full year 2019 results in line smts positioned to weather near term challenges

Posted on April 1, 2020May 4, 2022 by Admin

Wednesday, April 1, 2020

Sierra Metals (SMTS)

Full Year 2019 Results In Line; SMTS Positioned to Weather Near-Term Challenges

Sierra Metals Inc is a precious and base metals producer in Latin America. The company acquires, explores, extracts, and produces mineral concentrates consisting of silver, copper, lead, zinc and gold in Mexico and Peru. Its activity includes the operation of the Yauricocha Mine in Peru, and the Bolivar and Cusi mines in Mexico. Yauricocha is an underground polymetallic mine using the sublevel block caving and cut-and-fill mining methods. Bolivar is a copper-silver-zinc-gold underground mine using room-and-pillar mining method. The majority of the revenue is earned by selling of the mineral concentrates to its customers in Peru.

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

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

Full year earnings in line with expectations. Sierra Metals reported 2019 earnings per share of $0.03 which was in line with our estimate. Full year adjusted EBITDA amounted to $65.3 million. Operationally, the company executed well during the year and increased metals production reflected successful capacity expansions at each of the company’s mines.

Updating estimates. We have lowered our 2020 EPS and EBITDA estimates to $0.21 and $109.5 million, respectively, from $0.24 and $124.9 million. Our revised estimate reflects lower copper prices and higher treatment and refining costs. While we have lowered near term estimates, we think the long-term outlook remains favorable. We forecast 2021 EPS and EBITDA of $0.28 and…

Click here to get the full report.

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

Unemployment – how high can it go?

Posted on April 1, 2020 by Admin

“HELP WANTED” Signs Replaced with “CLOSED” Signs at Record Pace

Initial jobless claims in the week ended March 21 soared to a record 3.3 million people. This was by far the largest weekly claim at roughly five times the previous record in 1982 and roughly 16 times the rate of recent weeks. Last week’s jump alone was enough to double unemployment rates to a level of almost 6%. The cause for the increase, of course, was the Corvid-19 virus that led to an unprecedented shut down of the economy. Many of the claim filers were workers in the travel and entertainment businesses. However, as the effects of the virus continue, almost all industries will start to feel the effects of the shutdown. Companies involved in manufacturing, retail sales, and the service economy have all begun announcing layoffs. This has led many experts to speculate that initial unemployment claims for the week ended March 28 could be even higher when reported on Friday.

How bad could next week be?

By most indications, last week was only the tip of the iceberg. State-ordered shutdowns have spread since the week of March 21 and people have begun adhering to shutdown orders more stringently. What’s more, companies that initially reacted by protecting their employees are now facing the grim reality that a drop in revenues must be countered by reducing costs. Anecdotal evidence indicates that many states had difficulties processing the large number of claims. Filers reported being on hold for days, making it likely that some gave up and will try again this week. Pennsylvania, which reports claims daily, indicates that claims have continued to grow this week. Other states such as Colorado and Oklahoma are reporting that claims are running two to three times that of last week’s. Moody’s Analytics predicts initial unemployment claims could be 4.5 million this week.

And that’s not the
worse part …

Ben Casselman of the New York Times points out that unemployment numbers underestimate the overall impact because they don’t include people who are self-employed and ineligible for unemployment benefits. There has been a large increase in the number of self-employed workers due to the creation of a gig economy in recent years. It should also be noted that there is an accelerator effect associated with unemployment that will lead to future unemployment claims. When businesses such as retail shut down, other business such as advertising become affected. And, as unemployed individuals cut back on spending, all industries are affected.

How bad could unemployment get?

Treasury Secretary Steve Mnuchin, in pushing Congress to pass a stimulus package, warned that unemployment could soar to as high as 20% because of the effects of the Coronavirus. The only time the unemployment rate has risen above 20% in modern American history was a four-year period during the height of the Great Depression. His estimate now looks tame in comparison to more detailed studies. Economist at the Fed’s St. Louis district believe 47 million people could lose their job, which would translate to an unemployment rate of 32.1%. The estimate is based on 66.8 million workers being in occupations with a high risk of layoff. James Bullard, President of the Federal Reserve Bank of St. Louis, estimates that $2.5 trillion in lost income in the second quarter noting that gross domestic product may fall 50%.

How about some good news …

The good news is that the cause of the rise in unemployment is clear and expected to go away at some point. The return to normal will not be as sudden as the impact of the virus, but things will get better. Individuals and governments are taking the virus more seriously and taking steps to contain its spread. Companies are rushing to manufacture kits to identify people inflicted with the virus and ventilators to aid people suffering from the virus. A vaccine for the virus will be tested this fall. While steps to limit the spread of the virus are progressing, government has been very proactive in addressing the impact of the virus through fiscal and monetary stimulus. The government passed a $2 trillion relief package and the Fed has authorized a $500 billion treasury purchase package. The stimulus package should offset a drop in consumer and business confidence and help individuals and companies offset the impact of the virus in the short term. Of course, it comes at a cost as the national debt will rise in excess of $3 trillion to a level nearing $25 trillion.

What does it all mean?

The economic impacts of Covid-19 are severe and likely to get worse. The recovery will be slow and uneven. A study by McKinsey describes five stages of the virus: 1) spread, 2) containment efforts, 3) health care treatment response 4) health care prevention response, and 5) emergence of herd immunity. McKinsey indicates that experts believe that more than two-thirds of the population would need to be immune to contain the spread of a virus. This can be done by developing an immunity naturally or developing a vaccine. Development of a vaccine will have a big impact on whether an economic recovery take a v-shape, a u-shape, or a slow recovery with roller-coaster-like bumps on the way back up. Meanwhile, companies making employment decisions face a stark reality. They are seeing revenues and profits decline with no sense of certainty as to when they will return. Companies may be able to weather losses for a short period but will have no choice but to reduce costs including employment costs if the effects carry into the summer.

Suggested Reading:

How
Your Business Can Satisfy the Current Need for Content

CoVID-19
Where we are Right Now

Curbside
Financial Advisors

Sources:

https://www.kmov.com/news/unemployment-claims-could-reach-million-according-to-experts/article_70c07088-72e5-11ea-9f01-03ae8466f754.html, Anneken Tappe, CNN Business, March 26, 2020

https://www.cnbc.com/2020/03/30/coronavirus-job-losses-could-total-47-million-unemployment-rate-of-32percent-fed-says.html, Jeff Cox, CNBC, March 30, 2020

https://www.vox.com/2020/3/29/21198580/unemployment-insurance-claims-record, Matthew Yglesias, Vox, March 29, 2020

https://www.kcra.com/article/what-a-20-unemployment-rate-would-mean-for-america/31746821#, Show Transcript, KCRA Television.

https://www.bloomberg.com/news/articles/2020-03-22/fed-s-bullard-says-u-s-jobless-rate-may-soar-to-30-in-2q, Steve Matthews, Bloomberg, March 22, 2020

https://www.mckinsey.com/business-functions/risk/our-insights/covid-19-implications-for-business, McKinsey, March 2020

Research – Comtech Telecommunications Corp. (CMTL) – Favorable Risk-Reward, Lowering Estimates, Company Withdraws Guidance

Posted on April 1, 2020 by Admin

Wednesday, April 1, 2020

Comtech Telecommunications Corp. (CMTL)

Favorable Risk/Reward, Lowering Estimates, Company Withdraws Guidance

Comtech Telecommunications Corp. engages in the design, development, production, and marketing of products, systems, and services for advanced communications solutions in the United States and internationally. It operates in three segments: Telecommunications Transmission, Mobile Data Communications, and RF Microwave Amplifiers. The Telecommunications Transmission segment provides satellite earth station equipment and systems, over-the-horizon microwave systems, and forward error correction technology, which are used in various commercial and government applications, including backhaul of wireless and cellular traffic, broadcasting (including HDTV), IP-based communications traffic, long distance telephony, and secure defense applications. The Mobile Data Communications segment provides mobile satellite transceivers, and computers and satellite earth station network gateways and associated installation, training, and maintenance services; supplies and operates satellite packet data networks, including arranging and providing satellite capacity; and offers microsatellites and related components. The RF Microwave Amplifiers segment designs, develops, manufactures, and markets satellite earth station traveling wave tube amplifiers (TWTA) and broadband amplifiers. Its amplifiers are used in broadcast and broadband satellite communication; defense applications, such as telecommunications systems and electronic warfare systems; and commercial applications comprising oncology treatment systems, as well as to amplify signals carrying voice, video, or data for air-to-satellite-to-ground communications. The company serves satellite systems integrators, wireless and other communication service providers, broadcasters, defense contractors, military, governments, and oil companies. Comtech markets its products through independent representatives and value-added resellers. The company was founded in 1967 and is headquartered in Melville, New York.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

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Business Update and Guidance Withdrawal. Comtech released a business update and withdrew guidance after the market closed last night. We are lowering our estimates given the impact of the economic shutdown. We continue to believe these are short-term impacts and that Comtech is not losing sales, just seeing a delay.

The Numbers. For 3Q20, we are now at revenue of $142 million, down from $152 million, adjusted EBITDA of $9.3 million from $16.8 million, and a net loss of $0.09 per share versus a prior net income of $0.12. For the full year, we are at $653.9 million, $76.1 million, and…

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This research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

Research – Dyadic International Inc. (DYAI) – Q4 2019: Constructive 2019 Leading to a Promising Year Ahead

Posted on April 1, 2020 by Admin

Wednesday, April 1, 2020

Dyadic International Inc. (DYAI)

Q4 2019: Constructive 2019 Leading to a Promising Year Ahead

Ahu Demir, Senior Research Analyst, Noble Capital Markets, Inc.

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This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

Research – Great Lakes Dredge & Dock (GLDD) – Volatile Quarter But Favorable Outlook Intact

Posted on April 1, 2020 by Admin

Wednesday, April 1, 2020

Great Lakes Dredge & Dock (GLDD)

Volatile Quarter But Favorable Outlook Intact

Poe Fratt, Senior Research Analyst, Noble Capital Markets, Inc.

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This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).