Thursday, May 2, 2019

Albany International (AIN)

What’s in management’s secret recipe for margin enhancement?

Albany International Corp. is a textiles and materials processing company. The Company operates through two segments: Machine Clothing (MC) and Albany Engineered Composites (AEC). Its MC segment supplies permeable and impermeable belts used in the manufacture of paper, paperboard, nonwovens, fiber cement and various other industrial applications. 

Christian Herbosa, Research Analyst, Noble Capital Markets, Inc.

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

• Profitability Boost. In Q1, AIN saw meaningful improvements in profitability, increasing gross profit, operating profit, and adjusted EBITDA over Q1 last year by 18%, 135%, and 22.3% respectively. These improvements were largely driven higher net sales, as well as, labor productivity gains and overall equipment effectiveness improvements.  
• Additional Guidance Provided. Management updated the previously provided 2019 guidance with enhanced details. Notably, managem…

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Tuesday, April 30, 2019

Comtech Telecommunications (CMTL)

What Will the New Contract and Acquisition Mean?

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. 

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

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

• Awarded New Contract. Comtech
  announced yesterday that it has been awarded a five-year contract valued in
  excess of $100 million to develop, implement, and operate a Next-Generation 911
  emergency communications system for a Northeastern state. We believe the state
  to be Massachusetts where General Dynamics had a major contract. 
• Acquires NG-911 Business. In
  conjunction with the award, Comtech also announced the acquisition of the state
  and local government NG-911 business from General Dynamics. Coming on the heels
  of the Solacom acqui…
  
  
  
  
  
  
  
  

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Tuesday, April 23, 2019

KeyW Holding Corporation (KEYW)

Could It Go Higher?

KEYW Holding is a provider of mission-critical cybersecurity, cybersuperiority, and geospatial intelligence solutions to U.S. government defense, intelligence, and national security agencies. Its solution includes collection, processing, analysis, and dissemination of intelligence information in cyberspace and geospace domains.

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

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

• Announces Acquisition. KeyW yesterday morning announced it has singed a
  definitive merger agreement to be acquired by Jacobs Engineering (NYSE:JEC:Not
  Rated) for $11.25 per share in cash. The transaction has an enterprise value of
  $815 million, net of tax assets.
• Significant Premium. The
  $11.25 represents a 43% premium to KeyW’s closing stock price on April 18th and
  is above our 12-month price target of $10.50 per share. The merger
  consideration represents a 16.7x multiple on our 2019 adjusted EBITDA estimate
  and 15.2x our 2020 adjusted EBI…
  

  
  
  
  
  

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Wednesday, April 17, 2019

Vectrus Inc. (VEC)

What’s Next Following A Big Win?

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

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

• LOGCAP V Awards. Friday
  evening, the U.S. Army Contracting Command-Rock Island awarded four ID/IQ
  Multiple Task Order Contracts for LOGCAP V. Vectrus was awarded contracts for
  the CENTCOM and PACOM areas. The CENTCOM award includes Vectrus’s current
  K-BOSSS business. This is a significant positive development for the
  Company. 
• Stock Responds Favorably. On
  Monday, on the heels of the weekend announcement, VEC shares jum…
  

  
  
  
  
  

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Two crashes too many for the Boeing 737 MAX

(Note: companies that could be impacted by the content of this article are listed at the base of the story (desktop version). This article uses third-party references to provide a bullish, bearish and balanced point of view; sources listed in the “Balanced” section)

On March 10^th, Ethiopian Airlines Flight 302 experienced problems shortly after takeoff, struggled to ascend at a stable speed, and then crashed killing all 157 people on board. This follows the disturbingly similar incident that occurred last October in Indonesia when Lion Air Flight 610 crashed shortly after takeoff killing all 189 passengers. In both instances, the pilots were flying a brand-new Boeing 737 MAX.

The 737 MAX is the fastest-selling airplane in
Boeing (BA) history with about 5,000 orders from more than 100 customers
worldwide. The model has completed thousands of successful flights and was
widely considered by industry experts to be a safe aircraft. Nevertheless, following
the crash of Flight 302 the U.S. Federal Aviation Administration (FAA) moved to
temporarily ground the entire global fleet of 371 Boeing 737 MAX aircrafts. On Friday
April 5^th, Boeing’s CEO Dennis Muilenburg acknowledged
that both incidents were caused by the same malfunction and accepted
responsibility for the crashes saying, “We own it”. Boeing says the malfunction
that caused the crashes can be fixed, but will it restore the public’s faith in
air travel?

Monday, April 1, 2019

Albany International Corp. (AIN)

New CFO appointment: What does it signal?

Albany International
Corp. is a textiles and materials processing company. The Company operates
through two segments: Machine Clothing (MC) and Albany Engineered Composites
(AEC). Its MC segment supplies permeable and impermeable belts used in the
manufacture of paper, paperboard, nonwovens, fiber cement and various other
industrial applications. 

Christian Herbosa, Research Analyst, Noble Capital Markets, Inc.

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

• Management
  Update. After market close last Friday, AIN announced the that
  its Board of Directors appointed Stephen Nolan as CFO and Treasurer, effective
  today. Mr. Nolan succeeds John Cozzolino, who had served as CFO and
  Treasurer since 2011. 
• New CFO
  Background. Prior to joining AIN, Mr. Nolan served as CFO at
  Esterline, where he facilitated its sale to TransDigm. He also served as CFO
  for Vista Outdoor, which he helped spin-off from Alliant Techsystems (ATK). He
  also worked on the merger of ATK and Orbital Sciences to create Orbital ATK.
  Before those positions, Mr. Nol…
  

  
  
  
  
  

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making any investment decision. 

Monday, March 25, 2019

Information Services Group (III)

What Are Recent Management Actions Indicating?

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

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

• Stepping into the market. In
  a flurry of Form 4 filings, the top 3 III executives added to their already
  substantial stock holdings through the purchase of III shares on the open
  market. In total, CEO Michael Connors added 40,000 shares at prices in the
  $3.70-$3.73 range, CFO David Berger added 2,050 in the $3.67-$3.79 range, and
  Vice Chairman Todd Lavieri added 13,500 in the $3.69-$3.79 range.
• It’s been awhile. Friday’s
  Form 4 filings were the first open market purchases by CEO Connors since August
  2017, when Mr. Connors added 13,514 shares over a series of purchases in the
  $3.60-$3.70 range. Mr. Lavieri has a very limited Form 4 filing history, while
  it would appear this is the first open mar… 

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Monday, March 18, 2019

Information Services Group (III)

Is Information Services Positioned For Growth In 2019?

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

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

• 4Q 2018 miss due to unexpected
  items. The fourth quarter was impacted by a
  number of unexpected items, driving the top line miss. In total, these items
  reduced revenues by an estimated $4 million. Ex these items, III’s top line
  would have been closer to the $72 million range.
• RPA set for strong growth in 2019;
  Value not reflected in stock price. III’s RPA business ended 2018 at a $20 million plus run
  rate and is expected to end 2019 at a $30 million plus run rate. Given recent
  acquisitions in this space, the RPA business alone could be worth in excess of
  $60 mi…
  

  
  
  
  
  

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Friday, March 15, 2019

Information Services Group (III)

Record 4Q Revenues But Why the Miss On Consensus Numbers?

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

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

• Record 4Q and Full Year Revenues. III reported record 4Q revenue of $67.9 million and record
  full year revenue of $275.8 million. Adjusted EBITDA came in at $8.6 million
  for the quarter and $33 million for the year. Management had guided to revenue
  in the $280-$285 million range and adjusted EBITDA in the $35-$37 million range.
• Europe the Growth Driver Again. While Europe was up
  18% y-o-y to $25.3 million, the Americas business was down 3% to $38.1 million
  due to ongoing softness in the U.S. public sector and timing of client
  engagements, and Asia Pacific declined by $1.4 million to $4.5 mill… 

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Wednesday, March 13, 2019

KeyW Holding Corporation (KEYW)

Are needle moving contracts on the horizon.

KEYW Holding is a provider of mission-critical cybersecurity, cybersuperiority, and geospatial intelligence solutions to U.S. government defense, intelligence, and national security agencies. Its solution includes collection, processing, analysis, and dissemination of intelligence information in cyberspace and geospace domains.

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

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

• Solid Fourth Quarter Results. KeyW
  reported a solid fourth quarter with revenue of $126.3 million and adjusted
  EBITDA of $12.0 million. For the full 2018, KeyW met or exceeded all financial
  expectations, with revenue of $506.8 million and adjusted EBITDA of $49.6
  million. The Company achieved a record level of awards for the year at $657
  million. 
• Organic Growth to Drive 2019. Organic
  growth is expected to drive 2019 results, although the absence of the flight
  service contract in 2019 will obscure the growth. Rev… 

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Tuesday, March 12, 2019

Comtech Telecommunications (CMTL)

A Deeper Dive into 2Q19; Shares “On Sale” Following Recent Decline?

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. 

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

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

• Solid Quarter, But Stock Reacts Poorly. Comtech reported solid 2Q19 results, as we highlighted in our March 7, 2019 report. In spite of the operating results, the shares dropped over 14% on the news before recovering somewhat off the intraday lows.  
• A Reaction to Two Large Contracts. We believe the stock weakness can be tied to the delay in two large contracts CMTL is pursuing: BFT-2 and troposcatter. Both, multi-hundred million dollar potential awards. While in neither case have final awar… 

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Thursday, March 7, 2019

Kratos Defense & Security Solutions, Inc. (KTOS)

The Curtain Drops as the Valkyrie Takes Flight.

Kratos Defense & Security Solutions, Inc. provides engineering, information technology (IT) services, and warfighter solutions primarily in the United States. It operates in two segments, Kratos Government Solutions (KGS) and Public Safety and Security (PSS).

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

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

• Ride of the Valkyrie. Yesterday,
  the XQ-58A Valkyrie completed its inaugural flight, a significant milestone in
  the program. According to the Air Force, the aircraft behaved as expected and
  completed 76 minutes of flight time. The Air Force plans a total of five test
  flights over two phases.
• Disruptive Technology with
  Potential Huge Impact for Kratos. The
  tactical drones market is anticipated to be significantly larger than the $6.2
  billion target drone market. With yesterday’s flight, Kratos is on its way of
  capitalizing on this huge opportunity…
  

  
  
  
  
  

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Thursday, March 7, 2019

Comtech Telecommunications (CMTL)

Exceeds 2Q Expectations, Raises Full Year, With Potential Upside. Another Acquisition?

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. 

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

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

• Strong 2Q19 Operating Results. Net sales jumped 22.7% to $164.1 million, with Adjusted EBITDA of $23.2 million,  up 60.0%. GAAP EPS came in at $0.32 and adjusted EPS was $0.40. 2Q19 results exceed our, and management’s, expectations. Business momentum remains strong and the pipeline of opportunities continues to increase.
• FY2019 Targets Raised. Full year FY2019 revenue expectations now in the $645-$660 million range and Adjusted EBITDA in the $85-$89 million range. Compares to prior guidance of $625-$640 million and $84-$88 million, respectively. Notably, resu…

  
  

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