Tag: Industry Report

Tuesday, January 16, 2024

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

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

Refer to the bottom of the report for important disclosures

Optimism For A Good 2024. In this report, we provide our advertising outlook for 2024 and provide our best picks to play the expected advertising rebound. Our take on the year is based on an improving economic outlook, particularly in the second half of the year, and heavy influx of Political advertising. Our favorable advertising outlook is based on a resilient labor market and lower interest rates to avoid a recession in 2024.

Have we seen the trough for this cycle? With our economic scenario in mind, we anticipate an improving economic environment in the second half of 2024. Notably, we believe that advertising trends are improving into the first quarter 2024, with the rate of decline moderating for both Radio and Television. 

National advertising expected to strengthen. The weakness in National was the biggest issue for broadcasters in 2023. We believe that National advertising trends should improve in 2024 both from the perspective of a sluggish consumer in the first half and from an improving economic outlook in the second half.

How big will Political be? We anticipate a strong political advertising environment in 2024, an increase of 13% to roughly $10 billion from 2020 levels. Importantly, about half of the high margin political advertising dollars are expected to be spent with television broadcasters. 

Highlights of favorite picks for 2024. Media stocks are typically early cycle stocks, which tend to outperform in the midst of the economic downturn or trough as investors begin to anticipate economic improvement. We believe media stocks are timely and offer a compelling return potential given depressed valuations. In addition, some companies pay a dividend, offering attractive total return potential.

Investment Appraisal

Optimism For A Good 2024

The fortunes of advertising based companies are driven by the economy and the health of the consumer. As such, we start this report with our take on the economy in 2024. On December 4th, at Florida Atlantic University (FAU) in Boca Raton, Florida, Noblecon19 hosted an economic panel to discuss the business environment outlook for 2024. The economic panel consisted of a diverse group of industry professionals with a wide range of expertise and experience. In our economic outlook for 2024, we take into consideration the perspective of Jose Torres, Senior Economist at Interactive Brokers.

Mr. Torres highlighted 2023 as a resilient year for consumer spending, which was driven by excess pandemic savings accumulated in 2020 and 2021. Mr. Torres anticipates a slowdown in consumer spending and a strong labor market in 2024. Notably, he believes a resilient labor market will keep consumers spending and will keep the country from falling into a recession. Additionally, Mr. Torres highlighted that Personal Consumption Expenditures (PCE) annualized inflation over the last six months is running near 2.5%, which is very close to the FED’s goal of 2.0%. With moderating inflation pressures, Mr. Torres highlighted that the FED is likely to cut rates in March of 2024, which would be beneficial for small and mid-cap companies. While Mr. Torres largely has a positive outlook for 2024 and beyond, a point of concern was the federal government’s growing interest expense on debt, he noted that the government will eventually have to reduce spending or accept 3% – 3.5% inflation over the long-term.

The general U.S. economy is expected to soften in 2024, particularly in the first half, with a prospect that the economy could slip into recession. Our economic scenario for 2024 anticipates the economy will soften in the first half of the year and rebound in the second half of the year due to the prospect of a lower interest rate environment and resilient labor market.

The video of the Economic Perspectives panel may be viewed here. 

Small Cap Cycle?

Small cap investors have gone through a rough period. For the past several years, investors have anticipated an economic downturn. With these concerns, investors turned toward “safe haven” large cap stocks, which by and large can weather economic downturns and have significant trading volume should investors need to sell their positions. Notably, there is a sizable valuation disparity between the two classes, large cap and small cap, one of the largest since 1999. Some of the small cap stocks we follow trade at a modest 2.5 times Enterprise Value to EBITDA, compared with large cap valuations as high as 15 times. We believe the disparity is due to higher risk in the small cap stocks, given that some companies may not be cash flow positive, have capital needs, or have limited share float. However, investors seem to have overlooked small cap stocks with favorable fundamentals. While small cap stocks are more speculative than large caps, many are growing revenues and cash flow, have capable balance sheets, and/or are cash flow positive. In our view, the valuation gap should resolve itself over time for attractive emerging growth stocks. Some market strategists suggest that small cap stocks trade at the most undervalued in the market.

Dan Thelen, Managing Director of small cap equity at Ancora Advisors, highlighted the valuation gap between small cap and large cap stocks during the economic panel at Noblecon19 on December 5, 2023. Mr. Thelen noted that investors are not recognizing the risk mitigation efforts small cap companies have undertaken in the high interest rate environment. He believes that changes small cap companies have implemented are not reflected in stock prices and should be a tailwind moving forward. Again, his comments can be viewed on the video of the Economic Perspectives panel here. 

2024 Advertising Outlook

In our advertising outlook for 2024, we take into consideration the perspective of Lisa Knutson, Chief Operating Officer (COO) of E.W Scripps. Ms. Knutson is on the frontline of the economy as one of the largest TV broadcasters in the country. As a speaker on the Noblecon19 economic panel, she depicted the local and national advertising markets as a tale of two cities. Notably, Ms. Knutson highlighted resilience in local advertising and sequential improvement over the past few quarters in the auto advertising category. Additionally, she highlighted green shoots in local advertising, particularly in the services, home improvement and retail advertising categories. Importantly, political ad spend for the 2024 election cycle is expected to be approximately $10 billion, which is roughly a 13% increase from 2020, as illustrated in Figure #1 Political Ad Spend. About half of the high margin political advertising dollars are expected to be spent with television broadcasters. Our advertising forecast for television, radio and digital are highlighted later in this report. 

Figure #1 Political Ad spend

Source: Statista

Stock Recommendations

With our economic scenario in mind, we have identified certain media stocks that should perform well and/or lead the industry as economic prospects improve. Media stocks are typically early cycle stocks. This means that the stocks tend to outperform in the midst of the economic downturn or trough as investors begin to anticipate economic improvement. In addition, small cap stocks in general have been out of favor, with many stocks trading at historic low stock valuations (over the past several economic cycles) and also relative to the valuations of leadership stocks, such as the Magnificent 7 (Apple, Microsoft, Alphabet (Google), Netflix, Amazon, Nvidia and Tesla). This report highlights some of our favorite picks for 2024. Our favorites include companies that are leveraged to benefit from the influx of Political advertising and improving economy, generate positive free cash flow, and have capable balance sheets to invest it growth initiatives. Finally, we recommend stocks that have compelling valuations and/or pay a dividend to provide an attractive total return investment opportunity. 

Digital Media & Technology

Decelerating Revenue Growth, But Faster Than Other Advertising Categories

Digital Advertising has been growing rapidly over the past several years, bolstered by cord-cutting trends and generally, by an increasingly digital world. Digital Advertising includes various categories of advertising, such as audio, video, influencer, search, banner, and others. According to Statista, U.S. Digital Advertising spending is expected to grow at 15% Compound Annual Growth Rate (CAGR), from 2017-2028, from $90.1 billion to $402.1 billion. Figure #2 U.S. Digital Advertising Spend illustrates the 2017-2028 forecast, which is inclusive of the various different sub-categories of Digital Advertising.

Figure #2 U.S. Digital Advertising Spend

Source: Statista

Specifically in 2024, U.S. Digital Advertising is expected to grow a healthy 10% above 2023 levels, according to Statista. There are some categories of Digital Advertising, however, that are expected to grow especially fast in 2024, such as Connected TV (CTV) advertising, programmatic advertising, and influencer advertising. All three categorizations of Digital advertising are estimated to have above-average growth in 2024. According to Statista, influencer advertising in the U.S. will grow at 14% in 2024, while, according to eMarketer, U.S. programmatic and CTV advertising will grow at 13% and 17%, respectively.

In our view, there are several key factors strengthening these verticals. For example, influencer advertising allows brands to reach younger demographics through personalities those audiences trust. Moreover, during a time when there is uncertainty around the future of cookies and other forms of User IDs for targeted advertising, influencer advertising offers an alternative vehicle for audience targeting. Google has indicated plans to no longer use 3rd party cookies to deliver advertising in 2024, although the implementation of this plan has been delayed multiple times before. Additionally, we believe cord cutting is a major factor in the growth of connected TV, likely to be a strong growth vertical for programmatic digital advertising. 

Noble’s Digital Media indices fared well over the past year with most outperforming the S&P 500 over that span, as illustrated in Figure #4 Digital Media LTM Performance. Most recently, the Social Media and Marketing Tech indices have performed strongest, up 18.9% and 24.2%, respectively, over the last 3-months. Figure #3 Digital Media 3-month Performance illustrates the last quarter’s performance by Noble’s Digital Media indices. However, many of the indices were skewed positively by the strong stock performance of the larger cap constituents. For example, META was up 194% over the trailing 12 months, while Adobe (ADBE) and Salesforce (CRM) also performed well, up 77% and 98%, over the same timeframe, respectively. Yet, in Q4 the performance disparity began to abate with the smaller cap constituents of Noble’s Digital indices contributing more to the positive returns, for the most part. We believe this could signal the beginning of shift towards the smaller cap stocks that had depressed valuations in 2023 relative to their large cap counterparts.  

Despite the large cap versus small cap valuation disparity in 2023, there are several small cap stocks that performed well over the past 12 months, outshining respective indices. Notably, Direct Digital Holdings (DRCT) was up roughly 500% over the past year. Most of the runup of DRCT occurred late in Q4, after the company reported results far exceeding Street estimates. In our view, DRCT was substantially undervalued and is beginning to be discovered by more investors. Importantly, the increased trading activity has put the stock on investing screens for institutional, small cap investors. Another notable small cap performance was Townsquare Media (TSQ), which has a large Digital Advertising component to its business. TSQ was up 45% in the past year. 

Below, we outlined some of the investment highlights for our closely followed Digital Media companies. In addition, Figure #5  Ad Tech Industry Comparables highlights the stock valuations of the sector. As the chart depicts, our favorite stocks current trade well below the averages for the industry and some of the larger cap names. One of our closely followed companies, AdTheorent, is a stand out. Near current levels, the ADTH shares trade at a modest 2.5 times Enterprise Value to our 2024 Adj. EBITDA estimate, well below the 15.1 times average for the sector. Given the compelling stock valuation, we highlight this company as our current favorite in the industry. In addition, the Direct Digital shares trade at 10 times Enterprise Value to our 2024 Adj. EBITDA estimate, well below the 15.1 times industry average. As such, we view the DRCT shares as compelling. 

Figure #3 Digital Media 3-month Performance

Source: Capital IQ 

Figure #4 Digital Media LTM Performance

Source: Capital IQ

Direct Digital Holdings (DRCT) – Programmatic Advertising. We view DRCT as a compelling play on the Programmatic Advertising market. The company operates a sell-side platform (SSP), in addition to servicing buy-side advertising clients through managing their digital advertising strategies. Importantly, the company’s niche comes from its deep relationships with multi-cultural publishers, a key competitive advantage in our view. In 2024, we estimate the company’s revenue will grow 30% above our 2023 forecast with adj. EBITDA growth of 33%. For research reports and important disclosures, please click here.

AdTheorent (ADTH) – Programmatic Advertising. ADTH is a unique play on programmatic advertising with cutting-edge audience targeting capabilities, powered by its machine learning (ML) platform. Due to its ML platform, the company does not need to use third-party cookies and other forms of user IDs to target audiences. Not only does this position the company well for Google’s phasing our of third-party cookies, but it also allows the company to offer clients a privacy-forward method of audience targeting. Some key verticals for the company include the healthcare industry as well as connected TV. For research reports and important disclosures, please click here.     

Townsquare Media (TSQ) – Programmatic & SMB Digital Advertising. TSQ is a media company that has transformed from primarily a radio station operator to a Digital Advertising business, boasting multiple digital verticals. We believe it is a compelling play on the digital transition occurring in small business across the country. The company provides comprehensive digital marketing services to small and medium-sized businesses in its radio markets, leveraging its deep local relationships. Additionally, the company operates a programmatic advertising business, which is benefiting from the growth of CTV.  For research reports and important disclosures, please click here.

Entravision Communications (EVC) – Programmatic & Social Media Advertising. EVC is one of our favorite social media advertising plays. The company serves as Meta’s exclusive ad agency in several emerging markets, such as, certain regions of Latin America. It also represents TikTok in parts of Asia. In addition, the company owns a programmatic agency, known as Smadex. For research reports and important disclosures, please click here. 

Figure #5 Ad Tech Industry Comparables

Source: Noble estimates & Company filings

Traditional Media

The Largest Caps Performed The Best

The Newspaper Index was the only traditional media sector that outperformed the general market in the past quarter and trailing 12 months, as illustrated in Figure #7 Traditional Media LTM Performance. In the latest quarter, Newspaper stocks outperformed the general market, up 20.4% versus down 11.2% for the general market as measured by the S&P 500 Index. Notably, our index performances are market cap weighted, meaning larger cap stocks have a greater impact on index return than small cap stocks. In Q4, only two stocks in the Newspaper index, NYT and NWSA, posted positive returns. These were the largest cap stocks in the index. In Q4, NWSA and NYT were up 22.4% and 18.9%, respectively. For full year 2023, four out of the five companies in the Newspaper index posted positive returns, the strongest performers were NYT and NWSA, up 50.9% and 34.9%, respectively. The Broadcast TV Index was up a modest 5.2% for the quarter and down 11% over the past year. The worst performing index over the last quarter was the Radio Broadcast index, down on 10.9%, as Illustrated in Figure #6 Traditional Media 3-Month Performance. Additionally, the Radio stocks were the worst performing group over the last year as well, down 34.9%. While the Radio Broadcast Index and Broadcast TV Index had a tough year in 2023, we believe both indices should improve in 2024. We highlight some of our favorites in the sector commentary below. 

Figure #6 Traditional Media 3-month Performance

Source: Capital IQ

Figure #7 Traditional Media LTM Performance

Source: Capital IQ

Television Broadcast

Looking For A Better 2024

The Television industry had a tough year with soft core advertising and the absence of the year earlier Political advertising. Television revenues are estimated to have declined as much as 20% in 2023 inclusive of the absence of year earlier Political advertising. Total core television advertising is expected to have decline 3% in 2023, which excludes Political advertising, reflecting disproportionately weak National advertising and resilient Local advertising. Importantly, Television advertising accounts for less than 50% of total television revenue, with Retransmission revenue largely accounting for the balance. With growth in Retransmission revenue, we estimate that total Television revenue declined roughly 10% in 2023. 

We believe that revenue trends will improve in 2024 for the TV industry, supported by an influx of Political advertising and moderating trends in core National advertising. Nonetheless, given the exceptional Political advertising year that is expected, core advertising is expected to decline in 2024, with some advertising being displaced by the large volume of Political. We anticipate that Core advertising will decline roughly 2.3% in 2024, with total TV advertising up nearly 30% (reflective of the influx of Political). Total Television revenue, which includes Retransmission revenues, are expected to increase roughly 20%. 

We believe that the TV industry has some long term fundamental headwinds, which include continued weak audience trends, cord cutting (which adversely affects Retransmission revenue growth opportunities), and shifts in National advertising toward Digital and Influence Marketing. Offsetting these trends are Connected TV and prospects for new revenue opportunities offered by the new broadcast standard, ATSC 3.0. Importantly, the very high margin Political advertising every even year allows the industry to reduce debt and/or return capital to shareholders.

Our closely followed Television companies, E.W. Scripps and Gray TV, are among the two companies best positioned to benefit for the influx of Political advertising. Both are in swing markets that should disproportionately benefit from Political. In the case of E.W. Scripps, the company has a developed business model that benefits from cord cutting as consumers switch toward Connected TV and Over The Air Networks. Furthermore, in 2024, E.W. Scripps will benefit from double digit growth in Retransmission revenue as 75% of its subscribers have been renegotiated at significantly higher rates. Both companies, E.W. Scripps and Gray, are highly debt levered. As such, we believe that paring down debt should improve the equity value of the shares in 2024. In addition, we believe that both companies have compelling stock valuations. While the SSP and the GTN shares trade near the industry averages, the industry averages are well below past cycles. We would look for multiple expansion as economic prospects improve. At the same time, as free cash flow improves from high margin Political advertising, debt reduction should allow for a swing toward improved equity values. As such, the shares of SSP and GTN represent a compelling way to play both an improved economic outlook towards the second half of 2024 and influx of high margin Political advertising. Again, SSP has the benefit of strong growth of Retransmission revenue, as well. 

E.W. Scripps (SSP): One of the nation’s largest TV station broadcasters and unique play on the trend toward cable cord cutting. Scripps has nationwide over the air networks that can be viewed with a digital antennae that do not require a cable or satellite service. Given its orientation toward national networks, the company is expected to disproportionately benefit from the influx of national advertising. In addition, the company’s TV stations are located in swing States and in hotly contested markets that should benefit from the influx of Political advertising in 2024. We believe the level of Political will be closely watched by investors as the high margin Political advertising will allow the company to aggressive pare down debt, assuaging investor concerns over its current leverage. For research reports and important disclosures, please click here. 

Gray Television (GTN): One of the nation’s largest television broadcasters, the company has historically led the industry in terms of revenue  and disproportionately benefits from the influx of Political advertising. In addition, the company is expected to benefit in 2024 from its investment in the development of its studios in the Atlanta area called Assembly Atlanta. The company has yet to disclose the full benefit of the current lease arrangement. We believe that the value of the development and the stream of lease payments are not fully reflected in the current stock valuation. Furthermore, the company is expected to aggressively pare down debt through the influx of high margin Political advertising and the lease payments. In our view, the shares should react well to debt reduction. For research reports and important disclosures, please click here.

Figure #8 TV Industry Comparables 

Source: Noble estimates & Company filings

Radio Broadcast

Debt Struggles

Based on our estimates and our closely followed companies, Radio advertising is expected to have decreased 5.5% for the full year 2023. Illustrated in Figure #9 Radio Advertising Revenue. This decline reflected the adverse impact of rising interest rates and significant inflation, which hurt many consumer oriented advertising categories, as well as financials. In addition, we believe that Radio struggled with some headwinds from declines in listenership, as many consumers continue to work remotely post Covid pandemic. Local advertising was more resilient than National, which tends to be more economically sensitive. We estimate that Local advertising was down 6%, while National was down 19%. The results are expected to reflect the absence of Political advertising from the year earlier biennial elections. Digital advertising was a bright spot, increasing 6%, largely offsetting the decline in National revenue. 

Figure #9 Radio Advertising Revenue 

Source: Statista

Looking forward toward 2024, we expect Radio advertising trends to improve throughout the year, with the expectation that December 2023 may have been the trough for this economic cycle. Both Local and National advertisers should begin to anticipate improved economic conditions with the expectation that the Fed will lower interest rates late in the first quarter. Even though the economy is anticipated to continue to weaken in the first half 2024, advertisers may advertise to drive customer traffic and in anticipation of improved economic conditions. We anticipate that the year will start off weak, with the first quarter 2024 revenue expected to be down, but a more moderate decrease between 3% to 4%. Notably, the industry does not receive a significant amount of Political advertising in the first quarter.

In 2024, we expect consumer spending to soften, which will have an adverse affect on consumer oriented advertising, particularly Retail. Auto advertising is expected to buck that trend. In our view, auto manufacturers and dealers will likely step up advertising and promotions to lure consumers. Assuming lowered interest rates, we expect that Financial advertising should improve in the second half of the year, as well. Revenues are expected to be second half weighted, with improving core advertising trends and the benefit of the influx of Political advertising. Radio does not typically receive a significant amount of Political advertising, but it accounts for a meaningful 3% of total core advertising for the year. Political advertising largely falls in the third and fourth quarter. In addition, National advertising trends should improve in the second half as economic prospects improve. Digital advertising is expected to grow but more moderately than 2023, which is expected to be up 6%. We believe that Digital will increase near 5%, but some companies that have less developed Digital businesses, should report faster growth. 

In total, based on our closely followed companies, we anticipate Radio revenue growth of 5.6% in 2024. Our estimate is inclusive of our Political advertising outlook.

We encourage investors to take a basket approach to investing in the industry, as most companies should benefit from the improving fundamentals in 2024. Below we have outlined some of the investment highlights for our closely followed Radio companies. In addition, Figure #10 Radio Industry Comparables highlight the stock valuations of the sector, which are currently trading at recession type valuations levels. 

Beasley Broadcast (BBGI): We believe that the company will reflect above average revenue and cash flow growth in 2024 due to the prospect of fast growth of its developing Digital businesses. Digital accounted for roughly 20% of the company’s total revenues in 2023 and are expected to be a key revenue driver in 2024. In addition, the company’s stations are located in large, swing State markets and should benefit from the influx of Political advertising. The company does carry above average debt loads, but we expect that the company will pare down debt by roughly $20 million from current levels. The company’s target debt levels are $250 million by year end. For a Beasley Broadcast report and important disclosures, please click here.

Cumulus Media (CMLS): The company is viewed as a leveraged play on a recovery in National advertising. Given the company’s Network business, which is virtually all National advertising, roughly 50% of total company revenues are derived from National advertising. This is significantly higher than the industry average, which is roughly 12%. National advertising is expected to rebound as economic prospects improve in 2024. In addition, the company should disproportionately benefit from the influx of Political advertising. We estimate $23.5 million in high margin Political advertising, a 20% increase from the last Presidential election cycle, expected to total roughly 3.7% of 2024 advertising revenues. For research reports and important disclosures, please click here.

Entravision (EVC): Radio represents a small portion of total company revenues as the company has transitioned toward a Digital agency business model. Over 80% of total company revenues comes from its Digital businesses. As such, Entravision should grow faster than Radio industry averages as its Digital business is expected to grow. Furthermore, Entravision has one of the best balance sheets in the industry, expected to have virtually no net debt by year end. Finally, the EVC shares are among the cheapest in the industry, as highlighted in Figure #    Radio Industry Comparables. For research reports and important disclosures, please click here.

Saga Communications (SGA): Historically, the company has led the industry in terms of revenue and cash flow growth. Over the past few years, it lost that honor as the industry moved to expand its fast growing digital operations. Most recently, Saga has regained its top spot as it has developed its Digital operations and non traditional radio revenue. While the industry has moved Digital to account for as much as 50% of total company revenues, Saga currently is at a more modest   %. Nonetheless, its nascent Digital operations are growing at a rapid rate, allowing total company revenues to exceed industry averages. Saga has one of the best balance sheets in the industry, with a large cash position and virtually no debt. Furthermore, the company pays an attractive dividend, and, as such, represents an attractive total return potential. The SGA shares are largely undiscovered, trading at one of the cheapest stock valuation in the radio sector. For research reports and important disclosures, please click here.

Salem Media Group (SALM): Salem has a relatively stable Radio advertising business given its orientation toward the sale of long and short form block programming. Recently, the company tripped a debt covenant which created investor anxiety over its high debt leverage. The company recently announced that it plans to sell its Salem Church Products division for $30 million, it refinanced its revolver, and announced the sale of its money losing book publishing company, Regnery. In addition to these measures, the company has streamlined its management team and lowered costs. Recently, the company decided to delist, rather than seek alternatives to remain on its current exchange. In addition, the company has not closed on its planned sale of its Church Products division. As such, we believe that the company has significant hurdles to put itself on a path toward free cash flow generation and debt reduction. For research reports and important disclosures, please click here.

Townsquare Media (TSQ): Townsquare has led the charge toward a Digital transformation, with over 50% of its revenues from its Digital businesses. Importantly, its Digital businesses have margins are in line or better than its traditional Broadcast business. While a segment of its Digital business declined in 2023, we expect that it will regain its revenue momentum in 2024, particularly in the second half. At that time, the company is expected to benefit from an influx of high margin Political advertising, as well. We believe that the company has one of the best Digital strategies in the industry and is widely viewed as the model for other aspiring Digital divisions at other Radio companies. The shares trade below that of its industry peers, in spite of its above average revenue and cash flow growth. For research reports and important disclosures, please click here.

Figure #10 Radio Industry Comparables 

Source: Noble estimates & Company filings

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.