Author: slightbourne@noblecapitalmarkets.com

Wednesday, November 26, 2025

Michael Kupinski, Director of Research, Equity Research Analyst, Digital, Media & Technology , Noble Capital Markets, Inc.

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

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

Strong Q3 results. The company reported Q3 revenue of $97.6 million and adj. EBITDA of $26.7 million. While revenue was slightly below our estimate of $100.0 million, adj. EBITDA strongly outperformed our estimate of $7.2 million. Notably, the strong adj. EBITDA figure was largely driven by more efficient use of marketing spend, which decreased by 43% from the year earlier comparable period.

Key operating metrics. Bookings and monthly paying users (MPU) decreased by 4% and 16%, respectively, compared with the prior year period, but the decrease was expected as the company is focused on the quality of gameplay and retaining high-quality users. Furthermore, the company’s strategy is showing early signs of success, as average bookings per paying user (ABPPU) increased from $92 in Q3’24 to $107 in Q3’25.

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Americans hitting the road for Thanksgiving are getting an unexpected gift this year: significantly cheaper gas. For the first time in several years, more than half of U.S. states now report average gasoline prices below $3 per gallon — a welcome relief as millions prepare for the busiest travel week of the holiday season.

According to AAA, the national average sits at $3.05 per gallon, almost identical to this time last year. But the national figure doesn’t tell the full story. Twenty-eight states — especially across the Midwest, Great Plains, and Gulf Coast — have already fallen below $3. Some stations in Oklahoma have even posted $1.99 per gallon, marking the first sustained return of sub-$2 fuel since 2021.

Why Prices Are Falling — and Why Investors Care

Although seasonal patterns always help bring prices down in late fall, this year’s decline is being driven more directly by market forces that investors are watching closely. As colder weather approaches, drivers naturally consume less fuel, and refineries switch to winter blends that cost less to produce. These shifts usually bring moderate price relief.

But this time, the move is more significant because crude oil prices have been trending sharply downward. Both Brent and West Texas Intermediate — the world’s key oil benchmarks — have dropped more than 17% since January. Negotiations surrounding a potential peace plan between Ukraine and Russia have reduced geopolitical pressure on oil supply, causing traders to unwind long positions and reassess risk premiums.

For the energy sector, these developments have created a very different landscape than earlier in the year. Falling crude prices generally translate into softer revenue outlooks for oil producers, refiners, and integrated energy companies. As a result, energy stocks — which were among the strongest performers in previous cycles — have been trading with heightened volatility. Investors watching tickers like XOM, CVX, MPC, VLO, and major ETF benchmarks such as XLE are seeing direct impacts from this price retreat.

Market Opportunities and Risks

Lower gas prices often boost consumer spending in other categories, potentially supporting retail, travel, and hospitality stocks. But the inverse is true for segments tied to crude oil production. Drillers, exploration companies, and refiners tend to experience narrowing margins when crude prices decline.

However, for long-term investors, falling prices can also create strategic entry points into quality energy names. Historically, the energy sector has been one of the most cyclical in the market, and downturns have often preceded periods of renewed growth — especially when global demand rebounds or supply conditions tighten.

The Broader Economic Picture

California and Washington remain outliers with prices above $4 per gallon, but across most of the U.S., the current price movements are easing pressure on households that have been battling inflation on multiple fronts. With oil markets stable and demand softening as winter approaches, analysts expect gas prices to trend even lower heading into Christmas.

For consumers, it means more affordable travel. For markets, it signals shifting momentum in the energy sector. And for investors, it highlights a key moment to assess where the next opportunity might emerge — whether in undervalued energy stocks, travel-sector plays that benefit from lower fuel costs, or diversified holdings that capture both trends.

As the holiday season begins, falling gas prices are offering immediate relief on the road and setting the stage for important shifts in the energy and stock markets.

Atmus Filtration Technologies has taken a major step toward strengthening its position in the global filtration industry with the announcement that it will acquire Koch Filter Corporation for $450 million in cash. The deal, revealed on November 24, 2025, underscores Atmus’ strategy to diversify and expand into high-growth industrial air filtration markets, particularly in commercial and industrial HVAC, data centers, and power generation.

The acquisition gives Atmus an established and respected player in the air filtration sector. Koch Filter, founded in 1966 and headquartered in Louisville, Kentucky, has built a reputation for producing mission-critical filtration products that help improve air quality and protect equipment across a range of environments. Its portfolio includes HVAC filters, HEPA systems, activated carbon products, and specialized filtration solutions widely used across commercial buildings, manufacturing sites, health environments, and data centers.

In fiscal year 2025, Koch Filter generated $156 million in revenue, reflecting strong and consistent demand driven by increasing attention to indoor air quality, regulatory standards, and the growing need for clean environments in data-centric industries. Atmus views this expansion as an opportunity to accelerate growth while leveraging its existing global footprint and advanced media design capabilities.

According to Atmus CEO Steph Disher, the acquisition aligns perfectly with the company’s long-term strategy. “The acquisition of Koch Filter will accelerate Atmus’ growth by expanding into the industrial air filtration market,” she said. “The Koch Filter team brings deep customer relationships, extensive industry experience, and a leading product portfolio. Combined with our innovation capabilities, this positions us to unlock new opportunities.”

Financially, the transaction is expected to deliver meaningful returns. Atmus anticipates the acquisition will be accretive to Adjusted EPS and Adjusted EBITDA margin beginning in 2026. The company also projects a high-single-digit return on invested capital (ROIC) by 2028. After factoring in expected tax benefits, the present value of the deal falls to an estimated $395 million, lowering the effective purchase multiple to 10.9x after synergies and tax considerations.

To fund the acquisition, Atmus will use both existing cash reserves and borrowings under its credit facility, with the possibility of upsizing the facility to further support the transaction. The deal is expected to close in the first quarter of 2026, pending customary regulatory approvals and closing conditions.

For Atmus, this acquisition supports a broader vision: expanding beyond traditional transportation filtration into industrial, commercial, and infrastructure-based markets—sectors that are experiencing rapid transformation due to energy transition, digitalization, and heightened air quality standards. With a global presence spanning six continents and more than 4,500 employees, Atmus continues to position itself as a leader in filtration and media technology.

Once integrated, Koch Filter’s product offerings and long-standing customer base are expected to significantly enhance Atmus’ industrial platform, enabling the company to deepen its reach into sectors with growing demand for high-performance air filtration