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Haynes International (HAYN) – Lowering Fiscal Year 2024 Estimates; Rating Remains Outperform

Posted on by cpereira@noblefcm.com


Wednesday, January 10, 2024

Haynes International, Inc. is a leading developer, manufacturer and marketer of technologically advanced, nickel and cobalt-based high-performance alloys, primarily for use in the aerospace, industrial gas turbine and chemical processing industries.

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.

Updating estimates. We have lowered our first quarter, second quarter and full year fiscal 2024 earnings per share estimates to $0.70, $1.04, and $4.25 from $0.83, $1.16, and $4.50, respectively. Our full year EBITDA estimate has been reduced to $96.1 million from $100.3 million. The revisions are due mostly to a negative first quarter impact from fluctuations in raw materials prices which we think could extend beyond the first quarter. While the first quarter is typically the company’s weakest, the company made some operational upgrades which may also have impacted efficiency and the mix of products sold during the quarter. Our third and fourth quarter fiscal year 2024 estimates are unchanged.

Impact of falling commodity prices. Raw material price fluctuations can impact Haynes’ results due to its product portfolio being solely high-end nickel and cobalt-based alloys. Production of these alloys generate a significant amount of scrap which is recycled but puts the commodity price risk associated with the scrap on the company and has an impact when market prices change. During the first quarter of fiscal 2024, nickel and cobalt futures prices fell 11.2% and 13.0%, respectively. Following the company’s fourth quarter 2023 earnings release on November 16 through the end of the quarter, nickel and cobalt future prices declined 3.6% and 13.1%, respectively, and have continued to weaken into January. As a reference point, Haynes’ fiscal year ends on September 30.


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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. 

Defense Metals Corp. (DFMTF) – Collaboration with Ucore Rare Metals Expected to Provide Mutual Benefits

Posted on by cpereira@noblefcm.com


Wednesday, January 10, 2024

Defense Metals Corp. is a mineral exploration and development company focused on the acquisition, exploration and development of mineral deposits containing metals and elements commonly used in the electric power market, defense industry, national security sector and in the production of green energy technologies, such as, rare earths magnets used in wind turbines and in permanent magnet motors for electric vehicles. Defense Metals owns 100% of the Wicheeda Rare Earth Element Property located near Prince George, British Columbia, Canada. Defense Metals Corp. trades in Canada under the symbol “DEFN” on the TSX Venture Exchange, in the United States, under “DFMTF” on the OTCQB and in Germany on the Frankfurt Exchange under “35D”.

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.

Collaboration with Ucore Rare Metals. Defense Metals recently executed a non-binding Memorandum of Understanding (MOU) with Ucore Rare Metals Inc. (TSXV: UCU, OTCQX: UURAF) to explore collaborative opportunities to advance each companies’ commercial objectives. Within the next few weeks, Defense Metals will ship a mixed rare earth carbonate sample from its Wicheeda rare earth project to Ucore’s Kingston, Ontario RapidSX commercialization and demonstration facility for testing.

Who is Ucore? Ucore seeks to provide separation products and services to the critical metals industry. Through strategic partnerships, Ucore’s plan includes: 1) developing a vertically integrated North American rare earth element (REE) supply chain, 2) establishing long-term feedstock supply relationships, 3) developing a heavy and light rare earth processing facility in Louisiana, 4) developing subsequent strategic metals complexes in the United States and Canada, 5) establishing long-term relationships with metal/alloy and magnet makers, and 6) the longer-term development of Ucore’s heavy REE mineral resource at Bokan Mountain on Prince of Wales Island, Alaska.


Get the Full Report

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. 

HPE’s Blockbuster $14B Acquisition of Juniper Networks Signals AI Networking Wars

Posted on by slightbourne@noblecapitalmarkets.com

Hewlett Packard Enterprise (HPE) sent shockwaves through the tech industry this week with the announcement of its planned $14 billion acquisition of Juniper Networks. The all-cash deal represents HPE’s largest ever acquisition and clearly signals its intent to aggressively compete with rival Cisco for network supremacy in the burgeoning artificial intelligence era.

The deal comes as AI continues to revolutionize networks and create new demands for automation, security, and performance. HPE aims to leverage Juniper’s networking portfolio to create AI-driven solutions for hybrid cloud, high performance computing, and advanced analytics. According to HPE CEO Antonio Neri, “This transaction will strengthen HPE’s position at the nexus of accelerating macro-AI trends, expand our total addressable market, and drive further innovation as we help bridge the AI-native and cloud-native worlds.”

With Juniper under its fold, HPE expects its networking segment revenue to jump from 18% to 31% of total revenue. More importantly, networking will now serve as the core foundation for HPE’s end-to-end hybrid cloud and AI offerings. The combined entity will have the scale, resources, and telemetry data to optimize networks and data centers with machine learning algorithms.

HPE’s rivals are surely taking notice. Cisco currently dominates enterprise networking and will face a revitalized challenger. Smaller players like Arista Networks and Extreme Networks will also confront stronger competition from HPE in key verticals. Cloud giants running massive data centers, including Amazon, Google and Microsoft, could benefit from an alternative vendor focused on AI-powered networking infrastructure.

The blockbuster deal also signals bullishness on further AI adoption. HPE is essentially doubling down on the sector just as AI workloads start permeating across industries. Other enterprise tech companies making big AI bets include IBM’s recent acquisitions and Dell’s integration of AI into its hardware. Startups developing AI chips and networking software are also likely to benefit from HPE’s increased focus.

For now, HPE stock has barely budged on news of the acquisition, while Juniper’s shares have jumped over 30%. HPE is betting it can accelerate growth and deliver value once integration is completed over the next two years. Analysts say HPE will need to maintain momentum across its expanded networking segment to truly threaten Cisco’s leadership. But one thing is clear: the AI networking wars have officially begun.

This massive consolidation also continues a trend of legacy enterprise tech giants acquiring newer cloud networking companies, including Cisco/Meraki, Broadcom/Symantec Enterprise, and Amazon/Eero. Customers can expect intensified R&D and new solutions that leverage AI, automation and cloud analytics. However, some worry it could lead to less choice and higher prices. Regulators are certain to scrutinize the competitive implications.

For now, HPE and Juniper partners see it as a positive development that gives them an end-to-end alternative to Cisco. Solution providers invested in networking-as-a-service stand to benefit from HPE’s focus on consumption-based, hybrid cloud delivery models. With Juniper’s technology integrated into HPE’s GreenLake platform, they can wrap more recurring services around a broader networking portfolio.

Both companies also promise a smooth transition for existing customers. HPE says combining the best of its Aruba networking with Juniper’s assets across the edge, WAN and data center will lead to better experiences and lower friction. Juniper CEO Rami Rahim also touts the deal as accelerating innovation in AI-driven networking.

Of course, the real heavy lifting starts after the acquisition closes, as integrating two complex networking organizations is no easy feat. HPE will aim to become a one-stop shop for customers seeking to modernize their networks and leverage AI, while avoiding the complexity of buying point products. With Cisco squarely in their crosshairs, the networking wars are set to reach a new level.

Red Sea Crisis Sends Container Rates Soaring

Posted on by slightbourne@noblecapitalmarkets.com

The escalating crisis in the Red Sea is creating chaos in global supply chains and sending container shipping rates skyrocketing. Liners like Maersk have indefinitely suspended all Red Sea transits after a U.S. military strike killed Houthi rebels who attacked container ships. This geopolitical turmoil means sharply higher costs for cargo shippers and potential volatility for investors in container shipping stocks.

The extensive rerouting of container ships around Africa’s Cape of Good Hope is severely disrupting global supply chains. But for investors focused on rates, the diversions are fueling optimism about 2024 profits for liner companies.

Various spot rate indexes show Asia-Europe rates have more than doubled since early December, with some lanes even tripling. Rates for routes to the U.S. East Coast have jumped 65-86% amid the intensifying military action and indefinite Red Sea suspensions. This promises to keep rates elevated through the first quarter of 2024.

However, while spot rates spike, rerouting ships increases voyage lengths by weeks and fuel consumption by tons. Military action also raises insurance costs. And delayed arrivals mean lower cargo volumes per quarter. Investors must weigh the benefits of higher rates against the headwinds of higher costs and reduced volumes.

Take a look at emerging shipping and logistics companies by taking a look at Noble Capital Markets’ Senior Research Analyst Michael Heim’s coverage list.

Zim’s stock price has been on a rollercoaster, plunging 18% in late December on hopes Red Sea transits would resume, then surging 23% in early January after the new suspensions were announced. This extreme volatility highlights the risks from geopolitical unpredictability.

With rates rising rapidly, heavily-shorted stocks like Zim could unleash violent short squeezes, forcing bearish speculators to cover positions at a loss. The jump in borrow fees for Zim shares signals the mounting risks for short sellers.

If Houthi attacks continue regardless of U.S. warnings, coalition airstrikes in Yemen become more probable. A major ground war would endanger oil supplies, increasing fuel costs for shipping companies. Investors need to assess escalation risks and potential fallout.

Despite the short-term chaos, long-term tailwinds like fleet capacity control, recovering demand, and infrastructure constraints still favor strong rates over the long run. Red Sea tensions don’t negate those structural positives.

The Red Sea emergency amplifies rate momentum but countervailing uncertainties persist. Investors should prepare for liner stock volatility, scrutinize rate indexes closely, and focus on carriers with cost discipline and contracted volumes. While geopolitical mayhem won’t disrupt long-term shipping tailwinds, it may bring choppy near-term waters for investors.

Release – Defense Metals to Ship Wicheeda Mixed Rare Earth Carbonate Sample to Ucore Rare Metals Inc.

Posted on by aweinsoff@channelchek.com

Research News and Market Data on DFMTF

09 Jan, 2024, 05:00 ET

Vancouver, BC, Jan. 9, 2024 /CNW/ – Defense Metals Corp. (“Defense Metals” or the “Company“; (TSXV: DEFN) (OTCQB: DFMTF) (FSE: 35D) is pleased to announce the Q4-2023 execution of a non-binding Memorandum of Understanding (“MOU“) with Ucore Rare Metals Inc. (TSXV: UCU) (“Ucore“) to explore collaborative opportunities as both companies move towards their respective commercialization efforts for a North American rare earth element (“REE“) supply chain. As one of the first projects under this MOU, Defense Metals will ship a mixed rare earth carbonate sample from its Wicheeda REE project to Ucore’s Kingston, Ontario, RapidSX™ Commercialization and Demonstration Facility (“CDF“).

SGS Canada Inc. in Lakefield, Ontario, will ship the sample to Ucore’s CDF on behalf of Defense Metals. This sample was generated during 2023 hydrometallurgical piloting test work performed on concentrate produced by earlier flotation pilot plant testing of a 26-tonne bulk sample from Defense Metals’ wholly-owned Wicheeda REE project in British Columbia.

Craig Taylor, CEO of Defense Metals, commented:

“We expect to ship a mixed rare earth carbonate sample in the next few weeks to Ucore’s demonstration plant for testing. The Wicheeda project is being developed as a viable source of REE from North America and as more processing and separation facilities become operational in the future, the demand for REE feedstock will be increasingly important. This MOU with Ucore is a further step in that direction to be part of the Western world’s REE supply chain.”

Pat Ryan, P.Eng., Chairman and CEO of Ucore, stated:

“The opportunity to align closer with Defense Metals is strategically important. The MOU lays out the framework wherein Defense Metals’ technically strong and readily accessible North American REE resource can be further processed and refined using Ucore’s Canadian-founded technology, RapidSX™. Receiving the sample mixed rare earth carbonate at our Kingston CDF will start the process of determining what may be possible between the companies as we collectively look to fuel the 21st-century energy transition.”

Qualified Person

The scientific and technical information contained in this news release as it relates to the Wicheeda REE Project has been reviewed and approved by Kristopher J. Raffle, P.Geo. (B.C.), Principal and Consultant of APEX Geoscience Ltd. of Edmonton, Alberta, and a consultant to the Company, who is a “Qualified Person” as defined in National Instrument 43-101 – Standards of Disclosure for Mineral Projects. 

About the Wicheeda Rare Earth Element Project

Defense Metals’ 100% owned, 8,301-hectare (~20,534-acre) Wicheeda REE Project is located approximately 80 km northeast of the city of Prince George, British Columbia; population 77,000. Wicheeda is readily accessible by all-weather gravel roads and is near infrastructure, including hydro power transmission lines and gas pipelines. The nearby Canadian National Railway and major highways allow easy access to the port facilities at Prince Rupert, the closest major North American port to Asia.

About Defense Metals Corp.

Defense Metals Corp. is a mineral exploration and development company focused on the development of its 100% owned Wicheeda Rare Earth Element Deposit located near Prince George, British Columbia, Canada. Defense Metals Corp. trades on the TSX Venture Exchange under the symbol “DEFN”, in the United States, trading symbol “DFMTF” on the OTCQB and in Germany on the Frankfurt Exchange under “35D”.

Defense Metals is a proud member of Discovery Group. For more information please visit: http://www.discoverygroup.ca/ 

For further information, please visit www.defensemetals.com or contact:

Todd Hanas, Bluesky Corporate Communications Ltd.
Vice President, Investor Relations
Tel: (778) 994 8072
Email: todd@blueskycorp.ca

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 news release.

Cautionary Statement Regarding “Forward-Looking” Information

This news release contains “forward–looking information or statements” within the meaning of applicable securities laws, which may include, without limitation, statements relating to advancing the Wicheeda REE Project, the expected shipment of the sample to Ucore and the expected timeline, the potential collaboration with Ucore, the technical, financial and business prospects of the Company, its project and other matters. All statements in this news release, other than statements of historical facts, that address events or developments that the Company expects to occur, are forward-looking statements. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results may differ materially from those in the forward-looking statements. Such statements and information are based on numerous assumptions regarding present and future business strategies and the environment in which the Company will operate in the future, including the price of rare earth elements, the anticipated costs and expenditures, accuracy of assay results, performance of available laboratory and other related services, future operating costs, interpretation of geological, engineering and metallurgical data, the ability to achieve its goals, that general business and economic conditions will not change in a material adverse manner, that financing will be available if and when needed and on reasonable terms. Such forward-looking information reflects the Company’s views with respect to future events and is subject to risks, uncertainties and assumptions, including the risks and uncertainties relating to the interpretation of exploration, engineering and metallurgical results, risks related to the inherent uncertainty of exploration, metallurgy and development and cost estimates, the potential for unexpected costs and expenses and those other risks filed under the Company’s profile on SEDAR+ at www.sedarplus.ca. While such estimates and assumptions are considered reasonable by the management of the Company, they are inherently subject to significant business, economic, competitive and regulatory uncertainties and risks. Factors that could cause actual results to differ materially from those in forward looking statements include, but are not limited to, continued availability of capital and financing and general economic, market or business conditions, adverse weather and climate conditions, failure to maintain or obtain all necessary government permits, approvals and authorizations, failure to maintain community acceptance (including First Nations),  risks relating to unanticipated operational difficulties (including failure of equipment or processes to operate in accordance with specifications or expectations, cost escalation, unavailability of personnel, materials and equipment, government action or delays in the receipt of government approvals, industrial disturbances or other job action, and unanticipated events related to health, safety and environmental matters), risks relating to inaccurate geological, metallurgical and engineering assumptions, decrease in the price of rare earth elements, the impact of Covid-19 or other viruses and diseases on the Company’s ability to operate, the price of commodities, capital market conditions, restriction on labour and international travel and supply chains, loss of key employees, consultants, or directors, increase in costs, delayed results, litigation, and failure of counterparties to perform their contractual obligations. The Company does not undertake to update forward–looking statements or forward-looking information, except as required by law.

All information in this news release concerning Ucore has been provided for inclusion herein by Ucore. Although the Company has no knowledge that would indicate that any information contained herein concerning Ucore is untrue or incomplete, the Company assumes no responsibility for the accuracy or completeness of any such information.

SOURCE Defense Metals Corp.

Global Economic Slump Spells Trouble for US and Investors

Posted on by slightbourne@noblecapitalmarkets.com

The World Bank delivered sobering news this week in its latest “Global Economic Prospects” report, forecasting that global growth will continue to decline for the third straight year in 2024. At just 2.4%, worldwide expansion will mark the weakest five-year period since the early 1990s.

While the US economy has so far avoided recession despite high inflation and interest rate hikes, this prolonged global slowdown spells troubling times ahead for American companies, consumers and investors.

With economic growth slowing across most regions, demand for US exports is likely to take a hit. That’s especially true among major US trading partners like Europe and China, where growth is expected to continue decelerating. Weakening global demand could mean reduced overseas profits for US corporations.

At home, slower worldwide growth often translates to weaker job creation and output in export-reliant industries like technology, aerospace, agriculture and oil. Though the US economy is more insulated than many countries, cooling global demand would threaten domestic growth and productivity.

For American consumers, a slumping world economy means higher prices and tightening budgets. As other nations buy fewer US goods, the dollar strengthens against foreign currencies. That makes American products and services more expensive for international buyers, compounding the export slowdown.

Meanwhile, weaker global growth tends to reduce international appetite for oil and other commodities, bringing down prices. But previous commodity plunges didn’t translate into much consumer relief at the gas pump or grocery store. US inflation has shown stubborn persistence despite declining global demand.

For investors, a rocky global economy brings heightened volatility and uncertainty. US stocks often suffer from reduced exports, earnings and risk appetite. Bonds become more attractive as a safe haven, but provide little income. International investments also falter as foreign economies sputter.

With developing nations hit hardest by the global downturn, their stocks and currencies become riskier bets. Investing in emerging markets seems particularly perilous as growth in those countries lags the developed world by a widening margin.

But it’s not all gloomy news for investors. Some experts argue that ongoing globalization and diversification make the US less vulnerable to foreign slowdowns than in the past. Plus, some areas like the travel, manufacturing and technology sectors could see gains from specific international developments.

And slowdowns inevitably give way to upswings. The World Bank sees global growth accelerating slightly in 2025. Meanwhile, strategists say investors should take advantage of market overreactions to bad news to buy quality stocks at bargain prices – potentially reaping big rewards when conditions improve.

Still, there’s no doubt the darkening global outlook presents mounting risks for the US in the next few years. With other major economies struggling, America can’t escape the coming storm entirely.

Navigating the choppy waters ahead requires prudent preparation. The World Bank urges policy reforms to enable productivity-enhancing investments that could reignite US and global growth. But in the meantime, Americans must brace for bumpier times, with US growth, jobs and earnings likely to suffer collateral damage from the world’s economic travails.

Hemisphere Energy (HMENF) – Estimates finetuned to reflect weak December quarter energy prices

Posted on by cpereira@noblefcm.com


Tuesday, January 09, 2024

Michael Heim, Senior Vice President, Equity Research Analyst, Energy & Transportation, Noble Capital Markets, Inc.

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

As indicated in our recent energy industry report, energy prices were weak in the quarter ended December 21, 2023. WTI oil prices averaged $78.41/bbl. below our $80/bbl. estimate. Henry Hub natural gas prices averaged $2.74/mcf. versus our $3.25/mcf estimate due to warm weather. The C$ to US$ exchange rate was 1.35 times versus our 1.33 estimate.

We are adjusted our estimates modestly to reflect updated energy price and exchange rate numbers. We now project December quarter revenues of C$27.1 million, down from C$27.7 million. Our EBITDA estimate for the quarter is now C$16.7 million versus C$17.2 million and our Adjusted Fund Flow estimate is C$13.2 million versus C$13.4 million. Our earnings per share estimate remains $0.11. We have not made any changes to our 2024 estimates. 


Get the Full Report

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. 

As Legacy Media Declines, Radio Stands Out – And New Players Emerge

Posted on by slightbourne@noblecapitalmarkets.com

The media landscape is rapidly shifting, with many legacy formats like pay TV seeing accelerating declines. But amid this turmoil, radio has showed surprising resilience according to a recent report. Terrestrial radio revenue and listenership has held relatively steady over the past decade even as cable TV crumbled.

This contrast highlights radio’s enduring role delivering localized, personality-driven and interactive content. While digital disruption has hindered other mediums, broadcasters see internet streaming and podcasts as opportunities to expand radio, not threats. Already, leading players are blending new digital formats with traditional over-the-air offerings.

The stubborn stability of radio presents a growth opportunity for investors amid the broader challenges facing legacy media. Traditional TV and print advertising revenue continues falling sharply, down 18% and 14% respectively in 2023 per GroupM estimates. But radio ad spending is only projected to slip 6% this year.

Plus, radio has room to run just to regain pre-pandemic ad levels. Industry leader iHeartMedia saw a 23% decline in broadcast revenue from 2019 to 2023. As the ad market rebounds post-Covid, radio looks relatively attractive compared to more distressed legacy formats.

This backdrop has powered a radio resurgence among new industry entrants spotting untapped potential. Direct Digital Holdings, which went public in 2022, and focuses on bringing digital marketing services to the marketplace.

Direct Digital believes this digital model can drive growth even as terrestrial broadcasting plateaus. The company aims to capture ad budgets shifting online through its provision of website, social media and other digital services to small businesses alongside traditional radio spots.

Another radio-centric new media play, Cumulus Media, is the country’s third largest radio broadcaster, reaching over 250 million monthly listeners nationwide. The company aims to grow by broadening its podcast portfolio and expanding digital marketing.

Cumulus sees its vast broadcast reach as a foundation to build a larger digital advertising presence. Its extensive owned-and-operated radio station network provides proprietary access to a loyal listener base that rivals tech platforms. The company is positioning itself as the radio industry’s digital transformation leader.

Radio’s resilience indicates it retains inherent competitive advantages that persist through technological changes. Broadcasters recognize and leverage their unique strengths even as they adapt business models. The localism and personality that define radio continue driving engagement.

Plus, radio’s cost structure is finely tuned after a century on the air. Mature players keep tight control of expenses and operate profitably on thinner margins than many digital media outlets. This helps incumbents squeeze more value from legacy radio as they make measured moves into emerging formats.

Investors must still approach new radio-centered media endeavors with eyes wide open. Industry ad revenues remain under pressure. Music streaming and podcasts pose competition for listeners’ time. Consolidation carries integration risks and may face regulatory hurdles.

But traditional radio has survived the disruptive forces that felled newspapers and gutted cable TV. This time-tested durability, combined with digital growth prospects, makes radio-oriented media a relatively bright spot for investors in a tumultuous industry.

Backed by resilient legacy radio assets and focused digital strategies, companies like Direct Digital and Cumulus Media, and many others, offer upside potential. Though uncertainty remains, their radio footholds provide a stable base absent in other legacy media formats ravaged by technological change.

For investors seeking growth media plays beyond tech giants, radio’s lingering relevance points to pockets of opportunity. New digital/broadcast hybrid models show promise for revitalizing radio’s mature but enduring advertising business. With the right vision and execution, radio-centric firms could unlock more value and continue this legacy medium’s surprising success story.

Take a look at more emerging media companies by taking a look at Noble Capital Markets’ Director of Research Michael Kupinski’s coverage universe.

InPlay Oil (IPOOF) – Estimates finetuned down to reflect weak December-quarter energy prices

Posted on by cpereira@noblefcm.com


Tuesday, January 09, 2024

InPlay Oil is a junior oil and gas exploration and production company with operations in Alberta focused on light oil production. The company operates long-lived, low-decline properties with drilling development and enhanced oil recovery potential as well as undeveloped lands with exploration possibilities. The common shares of InPlay trade on the Toronto Stock Exchange under the symbol IPO and the OTCQX Exchange under the symbol IPOOF.

Michael Heim, Senior Vice President, Equity Research Analyst, Energy & Transportation, Noble Capital Markets, Inc.

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

As indicated in our last energy industry report, oil and natural gas prices were weak in the December quarter. WTI oil prices averaged $78.40/bbl. in the quarter, below our previous estimate of $80/bbl. Henry Hub natural gas prices average $2.74/mcf., below our previous estimate of $3.25/mcf. due to warm weather. The C$ to US$ exchange rate was 1.35 times, slightly higher than our 1.33 estimate. We have adjusted our InPlay models to reflect updated results.

We are fine tuning our estimates to reflect lower energy prices and a higher exchange rate. Our revenue estimate for the 2023  December quarter has been lowered to C$44.7 million from C$47.2 million. Our EBITDA estimate for the quarter is now C$23.3 million, down from C$25.5 million and our Adjusted Fund Flow estimate is C$18.9 million, down from C$20.6 million. Our EPS estimate for the quarter drops to C$0.08 from C$0.09. We have not made any changes to our 2024 estimates. With this report, we are initiating 2024 quarterly estimates.


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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. 

Boeing Stock Plunges After FAA Grounds More 737 Max Jets

Posted on by slightbourne@noblecapitalmarkets.com

Boeing saw its stock plunge on Monday after the Federal Aviation Administration (FAA) ordered the temporary grounding of some Boeing 737 Max jets over a faulty aircraft part that flew off during a flight on Friday.

Boeing shares fell 8.7% to close at $188.49, marking the stock’s largest single-day percentage decline since March 2020. The selloff wiped out over $10.6 billion in market value, dropping Boeing’s market capitalization to around $111 billion.

The FAA directive impacts 171 Boeing 737 Max 9 jets that have been fitted with a faulty door plug. During an Alaskan Airlines flight last Friday, one of these door plugs flew off the fuselage mid-flight, raising serious safety concerns. No one was injured in the incident.

This latest 737 Max issue comes on the heels of a disastrous period for Boeing’s bestselling aircraft. In 2018 and 2019, two deadly crashes involving the 737 Max occurred just months apart, taking the lives of all 346 passengers and crew.

Investigations found fault with the plane’s MCAS automated flight control system, leading to a complete grounding of all 737 Max planes worldwide for nearly two years as Boeing implemented software fixes and other changes. The 737 Max was recertified for service in late 2020.

While Friday’s door plug malfunction does not approach the severity of the systemic flight control problems that caused the prior crashes, it highlights that quality control and safety issues continue to plague Boeing’s production of the 737 Max.

The FAA indicated its grounding order was issued because the faulty door plug condition likely exists on other new Max 9 aircraft besides the one involved in Friday’s incident. The agency is working closely with Boeing to inspect all potentially impacted planes.

Boeing has declined to comment on whether it was aware of problems with the integrity of the door plugs during initial design and manufacturing of the 737 Max 9, which first entered service in 2018. The company stated it is fully cooperating with the FAA and the ongoing investigation by the National Transportation Safety Board.

Aviation analysts say while concerning, this latest 737 Max issue seems unlikely to have long-term negative repercussions for Boeing or airlines operating the plane.

“This accident does not alter our positive view on [Boeing],” said Ken Herbert, analyst at RBC Capital Markets. “Initial indications are that this is an isolated incident, and the financial risk to the MAX is not thesis changing.”

Analyst Seth Seifman of JPMorgan also characterized the event as a setback that is “not helpful” for Boeing’s efforts to ramp up 737 production and deliveries. However, Seifman noted the extent of the impact remains unclear until regulators determine next steps for returning the newly grounded planes to service.

While Wall Street sentiment toward Boeing remains cautiously optimistic, investors are reacting with an abundance of caution given the company’s checkered track record with the 737 Max family. Boeing simply cannot afford any more major quality issues or negative incidents related to its bestselling aircraft, which accounts for nearly 50% of total company revenue.

After the turbulence of the past few years, Boeing’s reputation has already taken a hit and its management team is under immense pressure to safely accelerate production and deliveries of the 737 Max and other aircraft. This will be no easy task as supply chain constraints and labor shortages continue to create headwinds for aerospace manufacturing.

With air travel demand roaring back after the pandemic plunge, Boeing’s order book is full and the company aims to play catch up after recent challenges. But if Boeing cannot deliver those orders efficiently while maintaining the highest safety standards, more occasions like Monday’s stock plunge are likely on the horizon.

Johnson & Johnson Spends $2 Billion to Buy Ambrx and Expand in Oncology

Posted on by slightbourne@noblecapitalmarkets.com

Johnson & Johnson announced Monday that it will acquire clinical-stage biotech Ambrx Biopharma for $2 billion, making a big bet on Ambrx’s proprietary platform for developing next-generation antibody drug conjugates (ADCs) to treat cancer.

The acquisition provides Johnson & Johnson access to Ambrx’s promising pipeline of ADC candidates, while also allowing the healthcare giant to leverage Ambrx’s novel conjugate technology that improves the efficacy and safety of ADCs. Ambrx’s proprietary platform incorporates synthetic amino acids to allow site-specific conjugation of antibodies to toxic payloads, creating more stable ADCs with less off-target effects.

Johnson & Johnson is particularly interested in Ambrx’s lead asset ARX517, an anti-PSMA ADC currently in Phase 1/2 development for metastatic castration-resistant prostate cancer (mCRPC). Prostate cancer has long been a focus for J&J and its Janssen pharmaceuticals unit, with blockbuster prostate cancer drug Zytiga bringing in over $2 billion in annual sales prior to losing patent protection in 2019.

The pressing need for improved mCRPC treatments provided additional impetus for the deal. Over 185,000 men in the U.S. currently have mCRPC, with a poor median overall survival of less than two years. The early data for ARX517 demonstrates promising anti-tumor activity, and Johnson & Johnson believes the drug could become a first-in-class targeted ADC therapy for mCRPC if approved.

“We see a unique opportunity to harness the potential of this innovative ADC platform, and with our deep understanding of prostate cancer, deliver a targeted PSMA therapeutic for addressing the growing needs of the more than 185,000 patients living with metastatic castration-resistant disease today,” said Dr. Yusri Elsayed, Global Therapeutic Area Head for Oncology at Johnson & Johnson.

Beyond ARX517, Ambrx has several other ADC candidates in its pipeline targeting cancer antigens like HER2 and CD70, providing Johnson & Johnson with a robust suite of new ADC therapies that can be optimized using Ambrx’s conjugate technology.

The acquisition reflects Johnson & Johnson’s strategy of using deals to access innovation, especially in high-potential areas like oncology. With in-house R&D productivity under scrutiny, major players like J&J and its pharma peers have turned to M&A to supplement pipeline development. Cancer has been the top therapy area target for M&A over the past 5 years, according to EY data, demonstrating the demand for innovative oncology drugs.

Ambrx was founded in 2003 as a spin-out from The Scripps Research Institute. The company raised over $200 million in venture capital and held its IPO in 2021, listing on the NASDAQ exchange. The $2 billion buyout price represents a nice return for Ambrx’s backers and shareholders.

The deal is expected to close in the first half of 2024, pending approval from Ambrx stockholders as well as regulatory clearance. Upon completion of the acquisition, Ambrx’s stock will be delisted and it will no longer be an independent public company.

Johnson & Johnson’s acquisition of Ambrx highlights the pharma industry’s race to find new modalities like ADCs that can precisely target cancer cells while minimizing side effects. With cancer poised to become the leading cause of death globally, the need for better tolerated treatments has never been more pressing. J&J is making a big bet that Ambrx’s next-gen ADC platform can yield breakthroughs in achieving that goal.

Take a moment to take a look at Noble Capital Markets’ Senior Research Analyst Robert LeBoyer’s coverage universe.

Merck Acquires Harpoon Therapeutics for $680 Million To Diversify Cancer Immunotherapies

Posted on by slightbourne@noblecapitalmarkets.com

Merck has announced a definitive agreement to acquire clinical-stage biotech Harpoon Therapeutics for $23 per share in an all-cash deal valued at approximately $680 million. The acquisition provides Merck with Harpoon’s promising pipeline of novel T-cell engager immunotherapies that harness the body’s immune system to treat cancer.

Harpoon’s lead asset is HPN328, an investigational T-cell engager targeting delta-like ligand 3 (DLL3) for the treatment of small cell lung cancer (SCLC) and other neuroendocrine tumors expressing DLL3. HPN328 directs a patient’s T-cells to kill tumor cells displaying DLL3. In October 2022, Harpoon reported positive interim data from the ongoing Phase 1/2 trial showing encouraging tolerability and early signs of efficacy for HPN328.

The acquisition expands Merck’s burgeoning oncology portfolio, adding a new modality to its toolkit. “This agreement reflects the creativity and commitment of scientists and clinical development teams at Harpoon. We look forward to further evaluating HPN328 in innovative combinations with other pipeline candidates,” stated Dr. Dean Y. Li, President of Merck Research Laboratories.

Harpoon’s TriTAC and ProTriTAC Platforms

Beyond HPN328, Merck also gains Harpoon’s proprietary TriTAC and ProTriTAC platforms for developing novel T-cell engagers. TriTACs (tri-specific T-cell activating constructs) are engineered protein therapies designed to recruit a patient’s immune cells to attack tumor cells. The ProTriTAC platform applies a prodrug concept to remain inactive until reaching the tumor site.

Harpoon has an extensive pipeline of TriTAC candidates against various cancer targets, including:

  • HPN217: Targets B-cell maturation antigen (BCMA) for relapsed/refractory multiple myeloma, currently in Phase 1.
  • HPN601: Targets epithelial cell adhesion molecule (EpCAM) for solid tumors expressing EpCAM.
  • HPN424: Targets delta-like ligand 4 (DLL4) for solid tumors.
  • Other preclinical TriTACs targeting tumor antigens like NaPi2b, FLT3, and DLL3.

The platforms offer modular designs to quickly generate and test new immunotherapies directed to disease-specific targets. Merck can leverage these platforms to strengthen its immunotherapy pipeline in cancer and possibly other disease areas.

Merck Building an Oncology Powerhouse

Cancer immunotherapies represent the next wave of innovation in oncology drug development. The Harpoon acquisition aligns with Merck’s strategy to establish leadership in immuno-oncology.

Merck already markets the blockbuster PD-1 checkpoint inhibitor Keytruda, approved for 30 different cancer indications. Keytruda generated $17.2 billion in sales in 2021. Now with Harpoon, Merck adds T-cell engagers to its arsenal. These therapies provide another way to leverage the immune system against hard-to-treat tumors like SCLC.

Merck is also developing numerous other novel agents across various modalities:

  • Cancer vaccines targeting specific tumor mutations (Personalized Cancer Vaccine, V590, V591)
  • Antibody-drug conjugates (belantamab mafodotin, ladiratuzumab vedotin)
  • Bispecific fusion proteins targeting both PD-1 and LAG-3
  • First-in-class inhibitors (MK-6482, KL-A)

Combined with its extensive capabilities in discovery research and clinical development, Merck is positioning itself as an oncology powerhouse able to take on cancers from all angles.

The Harpoon acquisition provides another building block in this strategy. In Harpoon’s pipeline and platforms, Merck gains cutting-edge T-cell engager capabilities to complement internal immuno-oncology programs. Merck can advance Harpoon’s therapies into new combination regimens and indications to maximize their potential.

Deal Details

Under the terms of the agreement, Merck will acquire Harpoon through a subsidiary, purchasing all outstanding Harpoon shares for $23 each in cash. This represents a premium of 118% over Harpoon’s previous closing share price.

The deal has been approved by Harpoon’s Board of Directors and is expected to close in the first half of 2024, pending shareholder approval and regulatory clearances. It will be accounted for as an asset acquisition by Merck.

Harpoon shareholders will vote on the acquisition at a future shareholder meeting. The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act will also need to expire.

Advisors on the deal include Evercore Group for Merck and Centerview Partners for Harpoon.

With promising new immunotherapies and platforms adding to its robust oncology pipeline, Merck strengthens its leadership in the high-growth cancer drug market. The Harpoon acquisition provides Merck with new T-cell engager capabilities to help develop life-changing medicines for patients with cancer worldwide.

Release – GeoVax Appoints Dr. Marc Pipas as Executive Medical Director, Oncology

Posted on by aweinsoff@channelchek.com

Research News and Market Data on GOVX

 

 Strengthening GeoVax’s Team Advancing Gedeptin® Clinical Program

Atlanta, GA, January 8, 2024 – GeoVax Labs, Inc. (Nasdaq: GOVX), a biotechnology company developing immunotherapies and vaccines against cancers and infectious diseases, today announced the appointment of J. Marc Pipas, M.D., to serve as the Company’s Executive Medical Director, Oncology.

Kelly McKee, M.D., MPH, GeoVax Chief Medical Officer, commented, “Dr. Pipas’ addition to our team represents an important step forward in the strengthening of GeoVax’s organizational and operational resources to support advancement of our principal oncology asset, Gedeptin®, through clinical development and regulatory approval.  He is also well-positioned to guide the clinical development of GeoVax’s broader immune-oncology portfolio. We are excited to leverage the wealth of knowledge, expertise, and insights he will provide relative to the clinical developments in support of our oncology programs.”

“I am pleased to be joining the GeoVax team,” said Dr. Pipas. “Oncologic research and development is my passion and I look forward to engaging with our clinical researchers, regulatory authorities, and the medical community at large, to advance GeoVax’s mission.”

Dr. Pipas has extensive clinical, research, and leadership expertise in oncology, built on a long and successful academic career at Dartmouth-Hitchcock Medical Center/Norris Cotton Cancer Center, an NCI Comprehensive Cancer Center.  During his academic career, Dr Pipas led the GI Clinical Oncology Group for >10 years, served as Hematology/Oncology Fellowship Director, was Medical Director for the Office of Clinical Research in the Cancer Center, and served for more than a decade as a member of Human Subject Protection and Data Monitoring Boards. Following his academic career, he held positions of increasing responsibility in the biopharma industry, guiding the development of several novel oncology therapeutics through early- and late-stage clinical trials.

Dr. Pipas received his Doctor of Medicine degree from SUNY-HSC at Syracuse in 1989 and completed a residency in Internal Medicine at the Medical University of South Carolina in Charleston.  Following this, he completed a fellowship in Hematology/Oncology at Dartmouth-Hitchcock Medical Center in New Hampshire and was then invited to become a faculty member at Dartmouth Medical School where he achieved the rank of Full Professor. He has 40 scientific papers and more than 60 abstracts to his credit and has numerous nominations and awards for teaching and humanism in medicine. Dr Pipas brings a deep understanding of oncologic therapeutics and clinical trial management, as well as a network of research contacts and leadership skills honed by many years of experience.

About GeoVax

GeoVax Labs, Inc. is a clinical-stage biotechnology company developing novel therapies and vaccines for solid tumor cancers and many of the world’s most threatening infectious diseases. The company’s lead program in oncology is a novel oncolytic solid tumor gene-directed therapy, Gedeptin®, presently in a multicenter Phase 1/2 clinical trial for advanced head and neck cancers. GeoVax’s lead infectious disease candidate is GEO-CM04S1, a next-generation COVID-19 vaccine targeting high-risk immunocompromised patient populations. Currently in three Phase 2 clinical trials, GEO-CM04S1 is being evaluated as a primary vaccine for immunocompromised patients such as those suffering from hematologic cancers and other patient populations for whom the current authorized COVID-19 vaccines are insufficient, and as a booster vaccine in patients with chronic lymphocytic leukemia (CLL). In addition, GEO-CM04S1 is in a Phase 2 clinical trial evaluating the vaccine as a more robust, durable COVID-19 booster among healthy patients who previously received the mRNA vaccines. GeoVax has a leadership team who have driven significant value creation across multiple life science companies over the past several decades. For more information, visit our website: www.geovax.com.

Forward-Looking Statements

This release contains forward-looking statements regarding GeoVax’s business plans. The words “believe,” “look forward to,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “could,” “target,” “potential,” “is likely,” “will,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. Actual results may differ materially from those included in these statements due to a variety of factors, including whether: GeoVax is able to obtain acceptable results from ongoing or future clinical trials of its investigational products, GeoVax’s immuno-oncology products and preventative vaccines can provoke the desired responses, and those products or vaccines can be used effectively, GeoVax’s viral vector technology adequately amplifies immune responses to cancer antigens, GeoVax can develop and manufacture its immuno-oncology products and preventative vaccines with the desired characteristics in a timely manner, GeoVax’s immuno-oncology products and preventative vaccines will be safe for human use, GeoVax’s vaccines will effectively prevent targeted infections in humans, GeoVax’s immuno-oncology products and preventative vaccines will receive regulatory approvals necessary to be licensed and marketed, GeoVax raises required capital to complete development, there is development of competitive products that may be more effective or easier to use than GeoVax’s products, GeoVax will be able to enter into favorable manufacturing and distribution agreements, and other factors, over which GeoVax has no control.

Further information on our risk factors is contained in our periodic reports on Form 10-Q and Form 10-K that we have filed and will file with the SEC. Any forward-looking statement made by us herein speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. 

Company Contact:                     Investor Relations Contact:                     Media Contact:
info@geovax.com paige.kelly@sternir.com sr@roberts-communications.com 
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