Noble Capital Markets Research Morning Call

Noble Capital Markets Research Reports – Wednesday, November 29, 2023

Companies contained in today’s report:

Defense Metals Corp. (DFMTF)/OUTPERFORM – On a Positive Trajectory Going Into 2024

Defense Metals Corp. (DFMTF/$0.1142 | Price Target: $0.7)
Mark Reichman [email protected] | (561) 999-2272
On a Positive Trajectory Going Into 2024
Rating: OUTPERFORM

Mineral resource update. Defense Metals recently filed a NI 43-101 compliant mineral resource estimate (MRE) technical report for the Wicheeda Rare Earth Element (REE) Project. The 2023 mineral resource estimate, discussed in our research note dated September 13, represents an 18.2% increase in total rare earth oxide (TREO) and a 31.3% in tonnage compared to the 2021 MRE. Total measured and indicated mineral resources of 34.2 million tonnes, averaging 2.02% TREO is a significant upgrade compared to the previous estimate and can be included in the mine plan for the preliminary feasibility study that is expected to be completed in the first half of 2024.

Laying the ground work for off-take agreements. On Defense Metals’ behalf, SGS Canada shipped samples of mixed rare earth oxide and mixed rare earth carbonate to select processors, refiners, and metals traders in North America (2), Europe (2), and Asia (2). The shipments represent an important step toward future off-take agreements or strategic partnership opportunities. The company estimates a universe of 10 to 12 potential customers and so another set of shipments is expected.

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Noble Capital Markets Research Reports – Tuesday, November 28, 2023

Companies contained in today’s report:

Bit Digital (BTBT)/OUTPERFORM – Finalized AI Contract

Bit Digital (BTBT/$2.33 | Price Target: $4.50)
Joe Gomes [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
New Awards; Raising PT to $22
Rating: OUTPERFORM

Contract. Last week, Bit Digital announced details regarding its first Bit Digital AI contract. Under the terms of the agreement, Bit Digital will supply the customer with computational power from 1,504 GPUs for a period of three years. The contract will commence January 2024 and represents more than $35 million of annualized revenue to Bit Digital.

Platform. To fulfill the contract, the Company placed a purchase order for servers manufactured by Super Micro Computer, Inc., an authorized Nvidia OEM, that are equipped with 1,504 Nvidia HGX H100 GPUs along with related equipment, which are expected to be delivered to the Company by January 2024.

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Noble Capital Markets Research Reports – Monday, November 27, 2023

Companies contained in today’s report:

Kratos Defense & Security (KTOS)/OUTPERFORM – New Awards; Raising PT to $22
Labrador Gold Corp. (NKOSF)/OUTPERFORM – Drills Are Turning
Lifeway Foods (LWAY)/MARKET PERFORM – Moving Rating to Market Perform after Sharp Rise in Stock Price
LithiumBank Resources (LBNKF)/OUTPERFORM – Favorable DLE Test Results Bode Well for Boardwalk PEA
Maple Gold Mines (MGMLF)/OUTPERFORM – Looking Ahead

Kratos Defense & Security (KTOS/$19.46 | Price Target: $22)
Joe Gomes [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
New Awards; Raising PT to $22
Rating: OUTPERFORM

New Contracts. Kratos has been awarded some additional significant contracts over the past two weeks, maintaining the momentum of award receipt over the past couple of quarters. We believe the new awards demonstrate the Company’s multi-sector capabilities.

Award 1. Kratos received a single-award, indefinite-delivery/indefinite-quantity contract with a ceiling value of $579 million for the Command-and-Control System Consolidated (CCS-C) Sustainment and Resiliency. Space Systems Command (SSC) is the contracting activity for the award. Kratos will sustain and provide post-production development for the current CCS-C system for telemetry, tracking and commanding of current and future military communication satellites.

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Labrador Gold Corp. (NKOSF/$0.1 | Price Target: $0.5)
Mark Reichman [email protected] | (561) 999-2272
Drills Are Turning
Rating: OUTPERFORM

Drilling program. Labrador Gold currently has two drill rigs operating at its Kingsway gold project. One drill is operating at the Knobby discovery, while the other is operating in the Gap Zone between the Big Vein and Pristine targets. A third rig will likely be deployed in early December at the Golden Glove target. Drilling will test the area south of the Big Vein target to the southern boundary of the property which encompasses the Knobby discovery and Golden Glove. Once drilling is completed in the Gap Zone, the number of rigs operating will be two. Knobby is a priority target since the east-west strike crosscuts the regional northeast trend like structures known to host high-grade gold in quartz veins within the district.

Acquisition of the Hopedale property. Labrador Gold fulfilled the requirements of the Hopedale option agreement and exercised its option to acquire 100% of the four licenses covering 695 claims comprising the Hopedale property. Work to date by Labrador Gold has resulted in the discovery of three gold occurrences, which together with the previously known Thurber Dog occurrence, stretch over a 3-kilometer section of the northern portion of the Florence Lake greenstone belt.

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Lifeway Foods (LWAY/$17.09)
Joe Gomes [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Moving Rating to Market Perform after Sharp Rise in Stock Price
Rating: MARKET PERFORM

Moving to Market Perform. With the shares exceeding our recently instituted $13 price target, we are lowering our rating to Market Perform from Outperform. While we remain impressed with operating results, we believe a good portion of the recent share performance is being driven in anticipation of a sale of the Company, which we do not believe is imminent.

Stock Performance. LWAY shares are up 82% since closing at $9.38 on November 13th. While we believe the sell off in the shares following strong operating results was unwarranted, the subsequent price rebound has exceeded our $13 price target. To maintain an Outperform rating, our PT would need to exceed $19.50, which we believe would have LWAY shares “priced to perfection” from an operating standpoint, which, given the uncertain state of the economy, is a stretch in our view.

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LithiumBank Resources (LBNKF/$0.75 | Price Target: $2.75)
Mark Reichman [email protected] | (561) 999-2272
Favorable DLE Test Results Bode Well for Boardwalk PEA
Rating: OUTPERFORM

Impressive DLE test work results. Results from bench-scale G2L Greenview direct lithium extraction (DLE) test work on brine from LithiumBank’s Boardwalk lithium brine project produced a high-purity concentrated brine, or eluate, with lithium concentrations between 3,000 and 7,000 milligrams per liter with greater than 98% recovery of lithium from the brine and low levels of impurities.

Potential to reduce project operating costs. Lower cost reagents used in the G2L DLE processing are approximately a third of the cost of those used in the DLE process that was used in the company’s maiden Boardwalk PEA published in May 2023. The results are expected to be included in an updated Boardwalk PEA expected in late 2023.

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Maple Gold Mines (MGMLF/$0.04 | Price Target: $0.25)
Mark Reichman [email protected] | (561) 999-2272
Looking Ahead
Rating: OUTPERFORM

Board appointment. Mr. Kiran Patankar has been appointed President and Chief Executive Officer and has joined the company’s Board of Directors. He has served as Interim President and Chief Executive Officer since August. Mr. Patankar has led the execution of Maple Gold’s updated corporate strategy, which includes a detailed assessment of the company’s district-scale projects. We believe he will reshape the company into a leaner and more focused entity with an emphasis on value-added exploration.

Reining in costs. In 2020, 2021, and 2022, Maple Gold’s general and administrative expenses were C$3.0 million, C$4.9 million, and C$5.9 million, respectively, and C$2.8 million for the first six months of 2023. Third quarter G&A expenses were $0.4 million. Based on third quarter financials, Mr. Patankar is making excellent progress reducing corporate overhead costs. As the operating partner, we expect the company to be judicious with its capital and that of its joint venture partner, Agnico Eagle Mines. As of September 30, Maple Gold Mines reported cash and cash equivalents amounting to C$4.4 million and marketable securities amounting to C$336.4 thousand. Approximately $6.0 million of Douay-Joutel joint venture funding remains available through January 2025 from Agnico Eagle.

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Noble Capital Markets Research Reports – Wednesday, November 22, 2023

Companies contained in today’s report:

Hemisphere Energy Corporation (HMENF)/OUTPERFORM – Results beat expectations on higher pricing and lower costs
Xcel Brands (XELB)/OUTPERFORM – All According To Plan

Hemisphere Energy Corporation (HMENF/$0.95 | Price Target: $2.25)
Michael Heim [email protected] | (314) 308-9711
Results beat expectations on higher pricing and lower costs
Rating: OUTPERFORM

2023-2Q production rose as expected with new wells coming online. A robust summer of drilling resulted in higher production. Post-quarter flow rates allow us to bump up future production estimates. 

Realized prices came in better than expected. The basin discount was reduced adding to the rise in oil index prices. Management added swaps at attractive prices in response to higher oil prices.

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Xcel Brands (XELB/$0.8835 | Price Target: $3.5)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
All According To Plan
Rating: OUTPERFORM

Solid Q3 results. The company reported $2.9 million in revenue, which was in-line with our estimate of $2.6 million. Adj. EBITDA loss of $1.4 million was modestly lower than our estimate of a loss of $0.8 million. Notably, Q3 operating results were affected by less QVC programming due to talent scheduling conflicts related to a return to an in-studio production policy and non-recurring restructuring expenses.

Favorable licensing model. In November, the company completed its transition to a licensing model, and should report the last portion of its restructuring costs in Q4. Notably, we anticipate significant reductions in direct operating expenses from 2022 levels of roughly $7.5 million to roughly $4.0 million in 2024. Additionally, in Q4, we estimate sequential licensing revenue growth from Q3.

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Noble Capital Markets Research Reports – Tuesday, November 21, 2023

Companies contained in today’s report:

Xcel Brands (XELB)/OUTPERFORM – Likely To Be The Trough Toward Improved Results

Xcel Brands (XELB/$0.98 | Price Target: $3.5)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
Likely To Be The Trough Toward Improved Results
Rating: OUTPERFORM

Solid Q3 results. The company reported $2.9 million in revenue, which was in-line with our estimate of $2.6 million. Adj. EBITDA loss of $1.4 million was modestly lower than our estimate of a loss of $0.8 million, as illustrated in Figure #1 Q3 Results. Notably, Q3 operating results were affected by less QVC programming due to talent scheduling conflicts related to a return to an in-studio production policy and non-recurring restructuring expenses.

Transition toward a licensing model. In November, the company completed a restructuring process by entering into licensing agreements for its Longaberger and made in the US baskets businesses. The new licensing model is expected to significantly lower operating costs and be a key catalyst toward a swing to positive cash flow in 2024.

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Noble Capital Markets Research Reports – Monday, November 20, 2023

Companies contained in today’s report:

CoreCivic, Inc. (CXW)/OUTPERFORM – Some More New Contracts
Haynes International (HAYN)/OUTPERFORM – Updating Estimates; Outlook Remains Favorable

CoreCivic, Inc. (CXW/$13.73 | Price Target: $15)
Joe Gomes [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Some More New Contracts
Rating: OUTPERFORM

New Business. Last week, CoreCivic announced two additional management contracts, continuing the momentum exhibited since September. Significantly, the new business is with states and counties, two areas of focus for CoreCivic for growth. We believe the recent contract wins demonstrate both strong contracting progress and the high levels of interest in the Company’s services from governmental partners. Notably, utilizing existing bed inventory will help drive margin improvement at CoreCivic.

Wyoming. CoreCivic entered into a new management contract with the state of Wyoming for the housing of up to 240 male inmates at the Company’s 2,672-bed Tallahatchie County Correctional Facility in Tutwiler, Mississippi. The Company previously housed inmates for Wyoming under a management contract that had not been utilized since 2019. The term of the new contract runs through June 30, 2026.

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Haynes International (HAYN/$51.27 | Price Target: $62)
Mark Reichman [email protected] | (561) 999-2272
Updating Estimates; Outlook Remains Favorable
Rating: OUTPERFORM

Fourth quarter and fiscal year 2023 financial results. Haynes reported fourth-quarter net income of $13.1 million or $1.02 per share compared to $16.3 million or $1.30 per share during the prior year period. Fiscal year 2023 net income was $42.0 million or $3.26 per share compared to $45.1 million or $3.57 per share during the prior period. We had forecast fourth quarter and fiscal year 2023 net income of $12.4 million and $41.1 million, respectively, or $0.97 per share and $3.22 per share. Compared to the prior year periods, fourth quarter and fiscal year net revenues increased by 11.7% and 20.3%, respectively, to $160.6 million and $590.0 million. On a year-over-year basis, the product average selling price during the fourth quarter and fiscal year increased 11.5% and 14.9%, respectively. Fiscal year 2023 adjusted EBITDA increased to $79.0 million compared to $77.4 million in fiscal year 2022.

Updating estimates. While our 2024 EPS estimate remains $4.50, we have made some quarterly adjustments. Revenue and earnings in the first quarter of fiscal 2024 are expected to be higher compared to the first quarter of fiscal 2023, but lower than the fourth quarter of fiscal 2023. First quarter results are generally lower due to holidays and planned equipment maintenance. Additionally, management expects commodity price fluctuations to have a greater negative impact in the first quarter of fiscal 2024 than in the fourth quarter of fiscal year 2023. We project fiscal 2024 EBITDA of $100.3 million compared to our $104.3 million estimate.

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Noble Capital Markets Research Reports – Friday, November 17, 2023

Companies contained in today’s report:

Bit Digital, Inc. (BTBT)/OUTPERFORM – Gearing Up for the New Year
Government Solutions (Government Solutions) – Reacting to the Surge
Haynes International (HAYN)/OUTPERFORM – Fourth Quarter and Fiscal Year 2023 Earnings Surpass Our Expectations

Bit Digital, Inc. (BTBT/$2.07 | Price Target: $4.5)
Joe Gomes [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Gearing Up for the New Year
Rating: OUTPERFORM

Results. Bit Digital reported third quarter revenue of $11.6 million, up from $9.1 million last year and in-line with our estimate of $12 million. The Company recognized $11.3 million from bitcoin mining services and $244,780 in ETH staking services. Net loss for the quarter was $7.2 million, or a loss of $0.08 per share, versus the prior year’s net loss of $14.5 million, or $0.27. Adjusted EBITDA for the quarter was a negative $3.0 million versus a negative $4.6 million last year. 

More Agreements. The Company finalized two new agreements with Soluna Computing and Dory Creek during the quarter, bringing 4.4 and 17.5 megawatts of hosting capacity, respectively. The agreements bring two new states to Bit Digital’s geographic portfolio in Kentucky and Texas, and offers the Company an increased geographic diversification. We expect more announcements to follow, with the Company having active discussions with other potential hosts.

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Haynes International (HAYN/$49.94 | Price Target: $62)
Mark Reichman [email protected] | (561) 999-2272
Fourth Quarter and Fiscal Year 2023 Earnings Surpass Our Expectations
Rating: OUTPERFORM

Fourth quarter and fiscal year 2023 financial results. Haynes International reported fourth quarter net income of $13.1 million or $1.02 per share compared to $16.3 million or $1.30 per share during the prior year period. Fiscal year 2023 net income was $42.0 million or $3.26 per share compared to $45.1 million or $3.57 per share during the prior period. We had forecast fourth quarter and fiscal year 2023 net income of $12.4 million and $41.1 million, respectively, or $0.97 per share and $3.22 per share. Compared to the prior year periods, fourth quarter and fiscal year net revenues increased by 11.7% and 20.3%, respectively, to $160.6 million and $590.0 million. On a year-over year basis, the product average selling price during the fourth quarter and fiscal year increased 11.5% and 14.9%, respectively. Fiscal year 2023 adjusted EBITDA increased to $79.0 million compared to $77.4 million in fiscal year 2022.

Strong order backlog. Compared to the September 2022 quarter, the company’s order backlog increased 23.2% to $460.4 million although it declined by $7.7 million compared to the prior quarter. Haynes added production headcount and invested in inventory to increase shipping levels and net revenue. The strong order backlog has been driven by strength in aerospace and industrial gas turbine demand.

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Government Solutions
Joe Gomes [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Reacting to the Surge

More Funding? In testimony before the U.S. Senate Committee on Appropriations, U.S. Department of Homeland Security Secretary Mayorkas expounded on the Biden Administration’s $8.7 billion supplemental funding request for DHS to cover projected shortfalls, enhance enforcement, and hire additional personnel.

More Beds. One of the key items was increased surge capacity of up to 46,500 ICE detention beds. Recall, the current budgeted amount is 34,000 beds, although the most recent ICE report indicates nearly 37,000 beds were being used as of October 3rd and press reports indicate the current number is closer to 40,000. Additional funding for transportation and the Alternatives to Detention (ATD) program also was requested.

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Noble Capital Markets Research Reports – Thursday, November 16, 2023

Companies contained in today’s report:

Codere Online (CDRO)/OUTPERFORM – Another Beat And Raise Quarter
Comstock Inc. (LODE)/OUTPERFORM – GENMAT-1: We Have Lift-Off
MustGrow Biologics Corp. (MGROF)/MARKET PERFORM – Knocking Down the First Domino
Schwazze (SHWZ)/OUTPERFORM – Staying the Course

Codere Online (CDRO/$3.3 | Price Target: $9)
Michael Kupinski [email protected] | (561) 994-5734
Patrick McCann, CFA [email protected] |
Another Beat And Raise Quarter
Rating: OUTPERFORM

Strong Q3 results. The company reported Q3 revenue of €43.2 million, beating our estimate of €37.0 million by 16.8%. Adj. EBITDA in the quarter was zero, which was substantially better than our estimate of negative €6.2 million. The better than expected Q3 results were driven by strong year over year revenue growth in Spain and Mexico.

Key market performance. The company’s strong Q3 performance is partially due to year over year revenue growth of 63% in Mexico and 27% in Spain. Revenue growth in both regions was driven by an increase in the number of users and increased spend per customer. Additionally, increased profitability in the quarter was partially due to reduced marketing spend from the prior year period.

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Comstock Inc. (LODE/$0.48 | Price Target: $4)
Mark Reichman [email protected] | (561) 999-2272
GENMAT-1: We Have Lift-Off
Rating: OUTPERFORM

Fostering advanced exploration technologies. Comstock is collaborating with its strategic investee Quantum Generative Materials (GenMat) to develop and expand the next generation geostatistical digital model of its most strategic mining development areas, including the November launch of a space-based hyperspectral imager that will extract relevant chemical and physical information for high precision mineral prospecting. The goal is to incorporate innovative technology within its exploration activities to increase mineral resources to two million gold equivalent ounces.

Successful launch of satellite and imager. GENMAT-1 was launched via Maverick Space Systems aboard a SpaceX Falcon 9 Transporter rocket from Vandenberg Space Force Base in Lompoc, California on November 11. At an altitude of 500 kilometers, the satellite will continuously capture and transmit hyperspectral image data of minerals and surface matter. The initial mission is to capture hyperspectral data of the Comstock Lode.

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MustGrow Biologics Corp. (MGROF/$0.86)
Joe Gomes [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Knocking Down the First Domino
Rating: MARKET PERFORM

Registration Approval. MustGrow announced that its TerraSante product received the Washington State Department of Agriculture Fertilizer Registration Certificate and will apply to TerraSante product sales in Washington State. This comes after it was awarded an organic compliance certification from the USDA National Organic Program (OMRI) at the end of last month.

Near Future Revenue. Now being able to sell TerraSante, MustGrow has formed a sales & marketing commercialization strategy in conjunction with BioAg Product Strategies for the 2024 planting season. In the state, agriculture production totaled $9.49 billion, with the state being the largest producer of apples, blueberries, hops, pears, etc. Organic acres total 105,660, representing $652 million in total farm gate sales. We believe there is opportunity for MustGrow to market TerraSante to farmers and has the organic certificates to support it.

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Schwazze (SHWZ/$0.55 | Price Target: $4)
Joe Gomes [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Staying the Course
Rating: OUTPERFORM

3Q23 Results. Revenue of $46.7 million was up 8.2% y-o-y and in-line with our $47 million estimate. Adjusted EBITDA totaled $14.1 million and the Company generated $6.9 million of CFFO. The bottom line was impacted by a number of one-time impacts, which resulted in a $1.9 million loss, or a loss of $0.03/sh. We had forecast a $7.1 million loss, or a loss of $0.10/sh.

Light. The overall environment remains challenged, whether due to supply, less demand or increased competition, but there are pockets of light suggesting we should see incremental improvement in the environment over time. Schwazze continues to stay the course and we expect them to come out of the current malaise a stronger, better positioned company.

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Noble Capital Markets Research Reports – Wednesday, November 15, 2023

Companies contained in today’s report:

Alliance Resource Partners (ARLP)/OUTPERFORM – Refining Estimates; Outlook Remains Favorable
Blackboxstocks (BLBX)/NOT RATED – Reports Third Quarter Results
Onconova Therapeutics (ONTX)/OUTPERFORM – 3Q23 Reported With Several 2024 Milestones Announced
One Stop Systems (OSS)/MARKET PERFORM – A New Contract and a New Client
PDS Biotechnology Corp (PDSB)/OUTPERFORM – Clinical Milestones For 2024 Announced With 3Q23 Financial Results
QuoteMedia Inc. (QMCI)/OUTPERFORM – Another Quarter of Solid Growth
Seanergy Maritime (SHIP)/OUTPERFORM – September-quarter results in line with expectations
Snail Inc. (SNAL)/OUTPERFORM – A Positive Flip Side To The ARK Delay?

Alliance Resource Partners (ARLP/$22.4 | Price Target: $30)
Mark Reichman [email protected] | (561) 999-2272
Refining Estimates; Outlook Remains Favorable
Rating: OUTPERFORM

Refining estimates. We have increased our 2023 EBITDA and EPU estimates to $4.96 and $975.2 million from $966.2 million and $4.89. We decided to increase our total coal sales estimates which are now at the midpoint of guidance instead of at the low end. We also modestly increased our coal sales price per ton estimate to $65.15 from $65.00 but still within the guidance range of $64.50 to $66.00. We have lowered our 2024 EBITDA and EPU estimates to $998.1 million and $5.05 from $1.0 billion and $5.15 based on modestly lower commodity prices.

Why the revisions? Alliance has committed and priced 35.0 million tons in 2023, including 29.7 million tons in the domestic market and 5.3 million tonnes in export markets. While a portion of higher priced export volumes could be deferred into 2024, we think our previous estimate was too conservative. As part of our review, we also adjusted quarterly and full year 2024 estimates and refined both years’ estimates associated with equity method investments.

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Blackboxstocks (BLBX/$1.65)
Joe Gomes [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Reports Third Quarter Results
Rating: NOT RATED

3Q2023 Results. Revenue for the Company was $728,468 compared to $1.2 million last year. Average monthly revenue per user was $76.37 for the quarter compared to $78.19 in the prior year period. Operating expenses totaled $1.3 million compared to $1.9 million last year. Blackboxstocks reported a net loss of $671,745 or EPS loss of $0.21, compared to a net loss of $1.3 million or $0.40 EPS loss last year. Adjusted EBITDA was a negative $513,026 versus a negative $1.1 million in the prior year.

Member Count. Blackboxstocks had an average member count of 3,174 at the end of the quarter, down from 3,937 at the end of the second quarter and 5,197 last year. This continues a trend of decreasing users experienced by the company on its products for the year. The Company is exploring strategic marketing partnerships to increase the growth of its products.

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Onconova Therapeutics (ONTX/$0.66 | Price Target: $7)
Robert LeBoyer [email protected] | (212) 896-4625
3Q23 Reported With Several 2024 Milestones Announced
Rating: OUTPERFORM

Clinical Milestones For Narazaciclib and Rigosertib Expected In 2024. Onconova reported a 3Q23 loss of $4.7 million or $(0.23) per share. Cash on hand at the end of the quarter was $25.2 million, which we believe is sufficient to fund operations through 3Q24. The company reviewed several recent data presentations and the clinical milestones ahead for 2024.

An Additional Dose Level Has Been Added To The Narazaciclib Phase 1/2 Study.  As expected, Onconova announced that an additional dosing cohort has been added to the Phase 1/2 dose-escalation trial in solid tumors. The maximum tolerated dose  (MTD) was not reached in the first 6 cohorts, and did not show neutropenia and diarrhea commonly seen in other CDK4/6 inhibitors. This allows a higher dose level to be tested. The Phase 1/2 trial is expected to continue into 1Q23, followed by Phase 2 dose selection.

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One Stop Systems (OSS/$2.02)
Joe Gomes [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
A New Contract and a New Client
Rating: MARKET PERFORM

New Win. One Stop Systems, Inc. (OSS), has won a multi-million-dollar program with Leidos’ Dynetics, a provider of mission-critical solutions for the U.S. government. The new award with a new client illustrates management’s focus on broadening end markets and client relationships, in our view.

Contract Details. Valued at approximately $2.5 million to $3.5 million over the next three years, with an initial award of $500,000, the award is the first multi-year win OSS has secured with this prime contractor. OSS will provide its proprietary transportable compute and storage technology designed to power an emerging specialized mobile AI signal collection application.

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PDS Biotechnology Corp (PDSB/$6.23 | Price Target: $17)
Robert LeBoyer [email protected] | (212) 896-4625
Clinical Milestones For 2024 Announced With 3Q23 Financial Results
Rating: OUTPERFORM

Several Data Presentations With New Trials Expected In 2024. PDS Biotech reported a 3Q loss of $10.8 million or $(0.35) per share, ending the quarter with $54.3 million in cash. The company reviewed several clinical data presentations made during the quarter and gave updates on the expected milestones for its clinical trials and pipeline products.

VERSATILE-003 Is On Schedule To Begin In 1Q24. The Phase 3 VERSATILE-003 trial has received FDA comments on the amended IND and final study design. Clinical supplies have been made for the trial to start in 1Q23. The trial will test the combination of PDS0101 with Keytruda (pembrolizumab, from Merck) against Keytruda alone in patients with HPV16+ recurrent or metastatic head and neck cancer. 

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QuoteMedia Inc. (QMCI/$0.27 | Price Target: $0.44)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
Another Quarter of Solid Growth
Rating: OUTPERFORM

Solid Q3 results. The company reported Q3 revenue of $4.7 million, which was in-line with our estimate of $4.8 million and adj. EBITDA of $719,547, which was modestly below our estimate of $849,000, illustrated in Figure #1 Q3 Results. The slight adj. EBITDA miss was attributed to revenue mix and slightly higher than expected operating expenses. Notably, revenue and adj. EBITDA increased by 8.5% and 7.3%, respectively, from the prior year period.

Interactive Growth. The company’s interactive business had a strong quarter as revenue increased 16% from the prior year period, and does not include deferred revenue which increased 76% over the same period. Management attributed the favorable increase in revenue to large contracts that were recently signed. The company remains focused on signing larger clients, and has increased its headcount in its sales and marketing departments to support that goal.

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Seanergy Maritime (SHIP/$5.34 | Price Target: $10)
Michael Heim [email protected] | (314) 308-9711
September-quarter results in line with expectations
Rating: OUTPERFORM

Seanergy 2023-3Q results were generally in line with expectations. Shipping rates declined as expected but were offset by better-than-expected available shipping days. Operating costs and bottom-line results were also near expectations.

The company has fixed additional rates for the upcoming quarter and realized rates should rise. The company has locked in 60% of expected shipping days at an average rate that is roughly 25% above the average realized rate for the most recent quarter. Available days will go up with a new charter-in.

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Snail Inc. (SNAL/$1.28 | Price Target: $9)
Michael Kupinski [email protected] | (561) 994-5734
Patrick McCann, CFA [email protected] |
A Positive Flip Side To The ARK Delay?
Rating: OUTPERFORM

Strong Q3 results. The company reported Q3 revenue of $9.0 million, exceeding our forecast of $5.8 million. Adj. EBITDA for the quarter was a loss of $5.1 million, in line with our forecast.

Impressive launch. In October, the company launched ARK: Survival Ascended, which was the #1 selling game on the PC gaming platform, Steam, on launch day. Management noted that, so far, the game is performing 60% better than expectations, in terms of units sold.

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Noble Capital Markets Research Reports – Tuesday, November 14, 2023

Companies contained in today’s report:

Bitcoin Depot (BTM)/OUTPERFORM – Favorable Deployment
Cocrystal Pharma (COCP)/OUTPERFORM – 3Q23 Reported As Three Trials Make Progress
Lifeway Foods (LWAY)/OUTPERFORM – Another Record Quarter; Moving to Outperform
Salem Media Group (SALM)/OUTPERFORM – Waiting on a Big Deal

Bitcoin Depot (BTM/$2.4 | Price Target: $9)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
Favorable Deployment
Rating: OUTPERFORM

Solid Q3 Results. The company reported Q3 revenue of $179.5 million, up 2.7% from the prior year period, and adj. EBITDA of $13.9 million, up an impressive 21.1% year-over-year. While Q3 revenue was 5.7% below our estimate of $190.3 million and Adj. EBITDA was 4.9% lower than our estimate of $14.7 million, we view the results and company outlook favorably.

2024 Outlook. The company is focused on striking additional partnerships to deploy its approximately 1000 kiosks that are currently warehoused. We anticipate the number of kiosks will gradually increase over Q4 and 2024, a development we believe will have a favorable impact on operating results.

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Cocrystal Pharma (COCP/$1.88 | Price Target: $10)
Robert LeBoyer [email protected] | (212) 896-4625
3Q23 Reported As Three Trials Make Progress
Rating: OUTPERFORM

3Q23 Reported. Cocrystal reported a 3Q23 loss of $4.2 million or $(0.41) per share. The loss included a reversal of a 2Q22 legal charge of $1.6 million after a verdict was overturned by an Appeals Court and money returned to the company. During 3Q23, clinical progress included the start of the Phase 1 trial testing CDI-988 in pan-coronavirus and pan-norovirus trials, and authorization to begin a Phase 2a human challenge study in influenza A. 

CC-42344 To Start Clinical Trials Shortly. Cocrystal has received authorization from the UK’s MHRA (Medicines and Healthcare Regulatory Agency) to begin Phase 2a testing CC-42344, its orally administered protease inhibitor for influenza A. This placebo-controlled trial will administer a pharmaceutically prepared dose of influenza virus to infect healthy volunteers with, then test the safety and immunologic measurements of CC-42344 against the virus. Separately, Dr. Sam Lee, President and Co-CEO is scheduled to make a presentation at the World Vaccine Congress West Coast on the development of CC-42344 on November 28.

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Lifeway Foods (LWAY/$9.38 | Price Target: $13)
Joe Gomes [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Another Record Quarter; Moving to Outperform
Rating: OUTPERFORM

3Q23 Revenue. Revenue increased 7.2% y-oy to $40.9 million and represents the 16th consecutive quarter of y-o-y revenue growth. We had forecasted $39.5 million. Revenue growth was driven by volume growth in drinkable kefir, up 9% y-o-y, and the impact of price increases taken last December. Significantly, there does not appear to be any significant trading down, even with the uncertain economy.

GM and EPS. Gross margin in the third quarter improved 730 basis points to 27.3% and was better than our 25.6% estimate. Net income totaled $3.4 million, or EPS of $0.23, up from $983,000, or $0.06/sh, last year. We were at $2.4 million, or $0.14/sh. Higher volumes and more favorable milk prices y-o-y drove the results.

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Salem Media Group (SALM/$0.76 | Price Target: $4.25)
Michael Kupinski [email protected] | (561) 994-5734
Patrick McCann, CFA [email protected] |
Waiting on a Big Deal
Rating: OUTPERFORM

Q3 results below expectations. The company reported Q3 revenue of $63.5 million, slightly below our forecast of $64.7 million. Adj. EBITDA was $2.5 million, 42% below our forecast of $4.3 million, primarily due to elevated expenses.

Key asset sale agreements. In the last month, the company sold 3 stations in Greenville, SC, for $6.8 million. Moreover, the sale of the Salem Church Products business ($30 million) is expected to close in Q4, as well as several other asset sales. 

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Noble Capital Markets Research Reports – Monday, November 13, 2023

Companies contained in today’s report:

Comtech Telecommunications (CMTL)/OUTPERFORM – New Contract; Completed Sale
Kelly Services (KELYA)/OUTPERFORM – Moving Forward with Transformation in Challenging Environment
One Stop Systems (OSS)/MARKET PERFORM – Reports Third Quarter 2023 Results
YS Biopharma Co., Ltd. (YS)/OUTPEFORM – Tapping Into The Power Of The Immune System

Comtech Telecommunications (CMTL/$12.06 | Price Target: $20.00)
Joe Gomes [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
New Contract; Completed Sale
Rating: OUTPERFORM

New Order. Comtech announced a $20.0 million order from the Company’s UK-based partner, Spectra Group. The order will allow Spectra Group, the appointed regional distributor of Comtech’s Compact Over-the-Horizon Transportable Terminal (COMET), to service multiple orders already received, and several expected follow-on orders from undisclosed customers in the NATO and European regions. In September 2023, Spectra Group announced the receipt of a $8.0 million order from UK MoD to equip 3 (UK) Division with Comtech’s COMET systems.

COMET. The COMET system is designed to be easily integrated with other Department of Defense (DoD) and coalition tactical, mobile, and fixed communications systems to provide resilient, secure beyond-line-of-sight (BLOS) capabilities in some of the world’s most challenging environments.

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Kelly Services (KELYA/$19.73 | Price Target: $25.00)
Joe Gomes [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Moving Forward with Transformation in Challenging Enviornment
Rating: OUTPERFORM

3Q23 Results. Revenue of $1,118 million was down 4.3% y-o-y and down 5.8% on a constant currency basis. We had estimated $1,180 million. The Company incurred $15.4 million of transformation expenses in the quarter. Adjusted net income was $18.1 million or EPS of $0.50. We had estimated EPS of $0.28. Adjusted EBITDA was $25.5 million, or a 2.3% margin.

Transformation. Kelly continues to move ahead with the transformation plan, already eliminating a significant amount of expenses. We expect the transformation to position Kelly to accelerate profitable growth over the long-term with improved adjusted EBITDA margins.

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One Stop Systems (OSS/$44.11 | Price Target: $65.00)
Joe Gomes [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Reports Third Quarter 2023 Results
Rating: OUTPERFORM

3Q23 Results. Revenue came in at $13.7 million, slightly above our $13.5 million estimate, but down 27% y-o-y, reflecting the continued runoff of the Disguise business, which contributed $4.3 million of revenue in the year ago quarter. Higher operating expenses, including some one-time items, drove a net loss of $3.6 million, or a loss of $0.18/sh in the quarter, compared to net income of $132,533, or EPS of $0.01 last year. Adjusted loss was $0.03/sh compared to EPS of $0.03 last year. We had forecasted a loss of $0.10/sh.

Unique Position. We continue to believe OSS has carved out a unique position in the robust growth markets driven by artificial intelligence and sensor fusion, particularly in rugged high-performance compute demand at the Edge. Management remains committed to expanding efforts to secure new prime contractors, vehicle platforms, and multiyear contracts, both domestically and internationally.

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YS Biopharma Co., Ltd. (YS/$0.60 | Price Target: $5.25)
Gregory Aurand [email protected] | 212-497-4011
Tapping Into The Power Of The Immune System
Rating: OUTPERFORM

PIKA Immunomodulating Platform.  The novel PIKA technology has the capability to target and accelerate the immune response in a wide variety of vaccines and immuno-oncology therapeutics. PIKA activates and enhances the body’s immune response, increasing the effectiveness of vaccines. In immuno-oncology, with its multiple modes of action able to induce the production of multiple tumor-inhibitory cytokines and tumor cell apoptosis, PIKA could be applied to broad-spectrum anti-tumor activity in cancers.  

Significant Opportunities in Anti-Viral and Immuno-Oncology Markets. There are large unmet needs in Africa, Southeast Asia and China, among other parts of the world, in rabies, hepatitis B and cancers. The Asia-Pacific region is expected to have the highest growth rate in the world with higher levels of utilization of immunotherapies, driven by low vaccine penetration, increasing cancer prevalence, and improving patient awareness and disposable income.

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Noble Capital Markets Research Reports – Friday, November 10, 2023

Companies contained in today’s report:

Direct Digital Holdings (DRCT)/OUTPERFORM – Demonstrates Scaleable Growth
Eledon Pharmaceuticals (ELDN)/OUTPERFORM – 3Q23 Reported With Review Of Clinical Progress
Euroseas (ESEA)/OUTPERFORM – Euroseas reports strong earnings bucking a trend in the shipping industry
Harte Hanks (HHS)/OUTPERFORM – Building Blocks For Enhanced Growth
Haynes International – (HAYN)/OUTPERFORM – Refining 2023 Estimates
InPlay Oil (IPOOF)/OUTPERFORM – September-quarter results
Ocugen (OCGN)/OUTPERFORM – 3Q23 Reported With Several Products On Schedule To Reach Clinical Milestones In 2024
PDS Biotechnology Corp (PDSB)/OUTPERFORM – Triple Therapy Data Shows Benefits That Far Exceed Published Studies
The ODP Corporation (ODP)/OUTPERFORM – Third Quarter 2023 – Solid Operating Results
Townsquare Media (TSQ)/OUTPERFORM – Sum Of The Parts Support Significant Upside Potential

Direct Digital Holdings (DRCT/$2.61 | Price Target: $10.00)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
Demonstrates Scaleable Growth
Rating: OUTPERFORM

Impressive results. The company posted revenue of $59.5 million and adj. EBITDA of $5.4 million, both well above our expectations. Revenues accelerated sequentially, up 125.5% in the latest quarter, up from 66.5% in Q2. Notably, Sell-side revenue grew a whopping 174% over the prior year period.

Investments paying off. In our view, the especially strong quarter indicates that the company’s growth investments and tech platform are paying off sooner than expected. Importantly, the Sell-side segment processed 400 billion monthly impressions, due to increased capacity.

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Eledon Pharmaceuticals (ELDN/$1.15 | Price Target: $10.00)
Robert LeBoyer [email protected] | (212) 896-4625
3Q23 Reported With Review Of Clinical Progress
Rating: OUTPERFORM

3Q23 Loss Was Less Than Projected. Eledon reported 3Q23 loss of $10.3 million or ($0.35) per share, compared with our estimate of a loss of $14.5 million or $(0.57) per share. The difference was mostly due to R&D expense of $7.9 million compared with our estimate of $11.9 million. Cash and equivalents at the end of the quarter were $59.6 million.

Phase 1b Data Shows Protection and Strong Function. As discussed in our Research Note on November 3, data from the Phase 1b trial testing tegoprubart in prevention of renal transplant rejection was presented at the American Society of Nephrology Kidney Week. The data from 11 patients showed tegoprubart was safe, well-tolerated, and had no rejection. Importantly, all of the patients that were evaluated at least 90 days after transplantation had eGFR (estimated glomerular filtration rate) above 70 ml/min/1.72 m2. This is above 50th percentile of 50 ml/min/1.72 m2 average in published studies, and is a strong predicator of graft survival. One patient who completed the 1-year treatment period had a eGFR of 91 ml/min/1.72 m2 and went into the open-label extension study.

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Euroseas (ESEA/$24.33 | Price Target: $49.00)
Michael Heim [email protected] | (314) 308-9711
Euroseas reports strong earnings bucking a trend in the shipping industry
Rating: OUTPERFORM

Euroseas reported strong 2023-3Q results due to fleet expansion and better-than-expected shipping rates. Euroseas’ average TCE rate of $30,074 was similar to last year and last quarter. Euroseas’ strategy of locking in rates for the next 12-24 months has allowed it to escape the decline in shipping rates that is hurting other shipping companies. Euroseas continues to command a premium shipping rate due to the modernization of its fleet and size of ships. 

Costs inched higher due to fleet expansion. One exception is drydocking expense, which decreased with no ships in drydock during the quarter as compared to two ships in drydock at this time last year. Note that this quarter includes a $14 million impairment charge and a $16 million gain on the termination of a charter. Absent these two non-recurring items, operating costs would have been near expectations.

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Harte Hanks (HHS/$7.08 | Price Target: $14.00)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
Building Blocks For Enhanced Growth
Rating: OUTPERFORM

Q3 results largely in line. Total company revenue weas $47.1 million, in line with our $47.5 million estimate. Total company revenues were essentially flat with Q2 revenue of $47.8 million, which the company views as its baseline quarter. Q3 adj. EBITDA was $4.2 million, a few hundred thousand shy of our $4.8 million adj. EBITDA estimate.

Investing to accelerate growth. We believe that management is putting the pieces together to enhance the company’s long term revenue and adj. EBITDA growth. It has embarked on a strategy to add sales staff and drive efficiencies company wide. We believe that this strategy will pay dividends beginning in the second half 2024, but notably in 2025 as revenues ramp and margins improve. 

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Haynes International (HAYN/$46.78 | Price Target: $62.00)
Mark Reichman m[email protected] | 561-999-2272
Refining 2023 Estimates
Rating: OUTPERFORM

Updating estimates. We have trimmed our fiscal year 2023 EBITDA and EPS estimates to $80.6 million and $3.22 from $81.2 million and $3.25 per share. Our estimates reflect lower gross margins during the September quarter due to the negative impact of raw material fluctuations. Our September EBITDA and EPS estimates were lowered to $23.2 million and $0.97 from $23.7 million and $1.00. We are making no changes to our 2024 estimates and expect Haynes to provide guidance for fiscal 2024 when it reports results for fiscal year 2023. We still expect the September quarter will be Haynes’ strongest of the fiscal year in terms of volumes shipped, net revenues, and earnings.

Strong order backlog. Orders during the June quarter resulted in a record backlog of $468.1 million and represented a 4.8% increase compared to the prior quarter and a 38.4% increase on a year-over-year basis. Backlog pounds increased 3.2% during the third quarter to approximately 14.6 million pounds and increased 20.7% compared to the prior year period driven by strong demand in the aerospace and industrial gas turbine markets. In our view, the strong order book is indicative of the company’s strong competitive position and favorable outlook.

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InPlay Oil (IPOOF/$1.78 | Price Target: $6.00)
Michael Heim [email protected] | (314) 308-9711
September-quarter results
Rating: OUTPERFORM

Production increased 6% quarter over quarter despite continued curtailments and unplanned downtime. Curtailments and well pressure issues have hampered production for InPlay and other Canadian producers in recent quarters. InPlay invested $27.5 million during the quarter to drill and make infrastructure improvements. This represents more than half of the year’s capital expenditure budget. During the quarter, the company completed six wells and upgraded a natural gas facility to process 66% more gas.

InPlay reported strong results in the 2023-3Q and 2023-4Q should be better. Management indicated that its investments should lead to the fourth quarter being the highest production quarter of the year. Management did not make any changes to its guidance for 2023, 2024, and 2025 production and fund flow generation. With a drop in capital expenditures in the upcoming quarter, management should  have ample cash flow to pay dividends (7% yield), strategically repurchase shares, and explore small add-on acquisitions.

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Ocugen (OCGN/$0.37 | Price Target: $5.00)
Robert LeBoyer [email protected] | (212) 896-4625
3Q23 Reported With Several Products On Schedule To Reach Clinical Milestones In 2024
Rating: OUTPERFORM

Pipeline Is Set For 2024. Ocugen reported 3Q23 loss of $14.2 million or $(0.06) per share, compared with our estimated loss of $18.2 million or $(0.07) per share. Cash balance at the end of the quarter was $53.5 million. During 3Q23, data was presented for OCU400, INDs were approved for OCU410 and OCU410ST, and OCU500 was selected by the NIAID-NIH (National Allergy and Infectious Disease Institute of the National Institutes of Health) to begin clinical testing. NeoCart is also expected to begin a Phase 3 trial in 2H24. We see these pipeline events as important milestones for the company. 

OCU400 is on schedule to finalize the Phase 3 trial design. The Phase 1/2 trial has completed dosing of the RP patients and three LCA patients. The treatment protocols for the Phase 3 trial are expected to be finalized by year-end. Following FDA acceptance, the Phase 3 trial is expected to begin in early 2024 as expected. The final LCA patient data could allow FDA approval to include LCA patients in 2H24.

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PDS Biotechnology Corp (PDSB/$4.91 | Price Target: $17.00)
Robert LeBoyer [email protected] | (212) 896-4625
Triple Therapy Data Shows Benefits That Far Exceed Published Studies
Rating: OUTPERFORM

Triple Therapy Trial Results Show Much Longer Survival In HPV-Positive Cancer. PDS announced data from the Triple Therapy Combination conducted by the NCI (National Cancer Institute of the National Institutes of Health). This trial tested the combination of PDS0101, the tumor-targeted IL-12 derivative PDS0301, and a checkpoint inhibitor to give three mechanisms of action against HPV-positive cancers. While the patient sample is small, these results far exceed survival seen in published studies.

Results Shows Significant Improvements Over Expectations. Final survival data from the patients that had no previous therapy with immune checkpoint inhibitors (ICI naïve patients) showed 6 out of 8 (75%) of the patients alive at 36 months, compared with published studies with about 30% to 50% alive at 12 months and less than 30% alive at 24 months. Median overall survival for the ICI naïve patients has not been reached. 

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The ODP Corporation (ODP/$44.11 | Price Target: $65.00)
Joe Gomes [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Third Quarter 2023 – Solid Operating Results
Rating: OUTPERFORM

3Q23 Results. Revenue came in at $2.009 billion, down from $2.172 billion in 3Q22, driven by store closures, lower comparable sales, and a challenging economic environment. Adjusted net income was flat at $73 million, while adjusted EPS rose to $1.88 from $1.48 as a result of the reduction in outstanding shares. Adjusted EBITDA was $125 million, compared to $131 million last year.

Strategy Is Working. ODP delivered solid operating results in spite of the challenging economic environment, with strong adjusted EPS and adjusted free cash flow. Adjusted FCF in the quarter was $89 million. The Company’s low cost operating model continues to deliver.

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Townsquare Media (TSQ/$8.88 | Price Target: $23.00)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
Sum Of The Parts Support Significant Upside Potential
Rating: OUTPERFORM

In line quarter.  The company reported Q3 revenue of $115.1 million and adj. EBITDA of $27.2 million, both of which were in line with our estimates. Notably, digital advertising revenue grew a solid 5.5% from the prior year period, in spite of net revenue decreasing 3.8% over the same period. Digital revenues accounted for 52% of total revenue in Q3, a development we view favorably.

Q4 outlook on target. We are modestly lowering our Q4 revenue forecast in light of softer than expected Q4 pacings. Q4 total revenue is lowered from $116.3 million to $111.3 million. Notably, our Q4 and full year 2023 adj. EBITDA forecasts of approximately $24.9 million and $100.1 million, respectively, are largely unchanged due to direct operating expense reductions.

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Noble Capital Markets Research Reports – Thursday, November 9, 2023

Companies contained in today’s report:

Alvopetro Energy (ALVOF)/OUTPERFORM – Results near expectations with volumes preannounced and pricing set
CoreCivic, Inc. (CXW)/OUTPERFORM – Post Call Commentary – Improving Enviornment
EuroDry (EDRY)/OUTPERFORM – September-quarter results
GeoVax Labs, Inc. (GOVX)/OUTPERFORM – 3Q23 Quarterly Report Includes 2024 Milestones
Gray Television (GTN)/OUTPERFORM – A Return On Its Hidden Value May Become Visible
Largo Inc. (LGO)/OUTPERFORM – September-quarter results remain depressed but trends are starting to improve

Alvopetro Energy (ALVOF/$6.26 | Price Target: $14.00)
Michael Heim [email protected] | (314) 308-9711
Results near expectations with volumes preannounced and pricing set
Rating: OUTPERFORM

Alvopetro reported 2023-3Q net income of $5.8 million or $0.15 per diluted share. Results were slightly below our projections for net income of $6.3 million, or $0.17 per share. Sales were $12.3 million versus our $11.8 million estimate. With sales volume preannounced on a monthly basis and natural gas prices (95% of sales) preset by Alvopetro’s Gas Sales Agreement, there is little variance to expectations.

Production costs per unit rose explaining the slightly lower-than-expected results. Production expenses per barrel of oil equivalent (BOE) produced were $6.52 versus $3.34 last year and $5.77 last quarter. We attribute the rise to lower production volume and do not view it as an area of concern. Operating netbacks (realized prices less royalties and production costs) were $70.34 per BOE up from $59.83 last year and $67.46 last quarter. Higher netbacks reflect a natural gas price reset in February and August that increased pricing as well as a decrease in royalty costs.

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CoreCivic, Inc. (CXW/$14.13 | Price Target: $15.00)
Joe Gomes [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Post Call Commentary – Improving Environment
Rating: OUTPERFORM

ICE Pops Still Increasing. ICE detainee population grew to 36,845 at the end of the Federal government fiscal year, up from 35,289 in the prior week and press reports indicate the current population is closer to 40,000. CoreCivic ICE pops grew from 8,200 at the end of July, to 8,900 at the end of August, to 10,300 at the end of September and were up to 11,800 on Monday.

Positive Impact. The increasing ICE populations, if maintained, will benefit operating results to a greater extent in 4Q than they did in 3Q as many of CoreCivic’s ICE facilities reached the minimum guarantee level by the end of the third quarter. This should result in greater revenue and margin dollar growth for the Safety segment in 4Q23.

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EuroDry (EDRY/$14.86 | Price Target: $17.00)
Michael Heim [email protected] | (314) 308-9711
September-quarter results
Rating: OUTPERFORM

Shipping rates weren’t as bad as expected. The average TCE rate for the 2023-3Q was $12,126 down 37% but better than our forecast. Operating costs declined relative to last year with the sale of an older vessel. Costs will rise in future quarters with the addition of three ships. Financing costs rose due to higher interest rates. The company will add $30 million in debt as part of the ship acquisition, financing and additional $18 million from cash on hand. With shipping rates above expectations and operating costs below expectations, EBITDA and earnings surpassed our estimates.

What’s did we learn this quarter: EuroDry repurchased approximately 52,000 shares during the quarter at an an average price of $14.43. Several ships were rechartered at favorable rates, most notably the Alexadros P ($24,500 for the December quarter versus $9,450 in the September quarter). Management believes its recent partnership arrangement establishes the company as an investment partner amongst private investors. The implication is that future such arrangements are likely. Management estimates a net asset value of $51.47, significantly above the current stock price of approximately $15 per share. The company will continue replacing older vessels with new vessels. It would like to see the market improve over the next few years before selling older vessels.

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GeoVax Labs, Inc. (GOVX/$0.55 | Price Target: 6.00)
Robert LeBoyer [email protected] | (212) 896-4625
3Q23 Quarterly Report Includes 2024 Milestones
Rating: OUTPERFORM

GeoVax Announces 2024 Milestones and 3Q23 Financial Results. GeoVax reported a 3Q23 loss of $8.4 million or $(0.32) per share. The company reviewed the progress made during the quarter, including completion of enrollment for the Phase 2 trial testing CM04S1 as a booster in healthy patients, presentation of data from the Phase 1/2 data for Gedeptin showing safety and tumor reduction, and addition of 3 new clinical sites for the Phase 2 trial for CM04S1 in immunocompromised patients.

CM04S1 Has Made Progress In Three Trials. Enrollment has been completed in the Phase 2 trial testing CM04S1 as a booster for healthy patients that had received the Pfizer or Moderna mRNA vaccines. An announcement of the top-line data is expected shortly. As discussed in our Research Note on September 25, a publication of data from the Phase 2 trial in immuno-compromised patients showed both humoral and cellular immune responses in patients that have difficulty responding to vaccination. Three new clinical sites were also added to the trial. An Investigator Initiated Trial (IIT) in chronic lymphocytic leukemia (CLL) is expected to announce interim data in the coming months. 

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Gray Television (GTN/$6.87 | Price Target: $20.00)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
A Return On Its Hidden Value May Become Visible
Rating: OUTPERFORM

Solid Q3 results. The company reported Q3 revenue of $803 million, edging our estimate of $786 million by 2.2%. Notably, Adj. EBITDA in the quarter was a strong $210 million, handily surpassing our estimate of $179 million by 17.3%. Illustrated in Figure #1 Q3 Results. The quarter was driven by better than expected, high margin, political revenue and lower than expected corporate expenses. Importantly, political revenue in Q3 was $26 million, which beat our estimate of $15 million by 73%.

2024 outlook. In our view, the company stands to benefit from several favorable factors in the coming year. Notably, management increased political revenue guidance from $60 million to $80 million for full year 2023, which may indicate a strong election cycle in 2024. Additionally, the company has a history of surpassing expectations. Thus, we believe there could be positive upside in our 2024 estimates.

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Largo Inc. (LGO/$2.15 | Price Target: $8.00)
Joe Gomes [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
September-quarter results remain depressed but trends are starting to improve
Rating: OUTPERFORM

Volumes are down due to an accident and technical delays. However, management reports improved October results. Vanadium prices remain an issue, but the decline shows signs of abating. Management reports that input costs such as sodium carbonate are beginning to ease and that the company is actively working to lower costs at the mine and at Largo Clean Energy (LCE). 

Financial results remain depressed. The company has made several investments to improve operations including completing an infill drilling program. Completion of Largo’s Ilmenite plant and an initial shipment should not only improve profitability but also diversify sales. The company’s cash position remains adequate at $39.6 million to fund future operations. We would note that Largo’s debt position increased by $50 million year over year but was unchanged from June 30, 2023 levels.

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Noble Capital Markets Research Reports – Wednesday, November 8, 2023

Companies contained in today’s report:

Bowlero (BOWL)/OUTPERFORM – A Valuable Lesson On Pricing
Great Lakes Dredge & Dock (GLDD)/OUTPERFORM – Reports 3Q Results
MustGrow Biologics Corp. (MGROF)/MARKET PERFORM – Receiving More Approval
The GEO Group (GEO)/OUTPERFORM – Reported Third Quarter Results

Bowlero (BOWL/$10.72 | Price Target: $17.50)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
A Valuable Lesson On Pricing
Rating: OUTPERFORM

FY Q1 results. The company reported Q1 revenue of $227.4 million, 4.7% below our estimate of $238.5 million. The modest revenue miss was attributed to experimenting with various mid-week promotional pricing, which did not go well, before pivoting to a more cost effective pricing strategy. Adj. EBITDA in Q1 was $52.1 million, approximately 16% below our estimate of $62 million. While operating results were a tad softer, management gained valuable knowledge about its customer base.

2024 Outlook. Management views fiscal 2024 as a year of investment for more robust top and bottom line growth in fiscal 2025. Notably, for full fiscal year 2024, the company has allocated roughly $160 million for acquisitions, $40 million for new builds, and $75 million for conversions. In our view, the aggressive expansion efforts should help the company continue its impressive revenue growth trajectory.

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Great Lakes Dredge & Dock (GLDD/$6.48 | Price Target: $11.00)
Joe Gomes [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Reports 3Q Results
Rating: OUTPERFORM

Results. Great Lakes reported total revenue of $117.2 million, a decrease from $158.4 million the prior year and below our estimate of $137 million. Gross margin was 7.7% compared to 2.4%, but lower than our projection of 8.8%. Net loss was at $6.2 million, or $0.09 per diluted share compared to $9.9 million last year, or $0.15. We projected a net loss of $6 million, or $0.09 per share. Adjusted EBTIDA totaled $5.3 million versus $1.3 million in the previous year.

Backlog. Great Lakes ended the quarter record backlog of $1.03 billion, up from $327.1 million at 1Q23, not including approximately $50.0 million of performance obligations related to offshore wind contracts. In addition, the Company ended the quarter with $225 million in low bids and options pending award. Significantly, 71% of backlog was capital projects work, which will help drive margins higher going forward.  

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MustGrow Biologics Corp. (MGROF/$0.96 | Price Target: N/A)
Joe Gomes [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Receiving More Approval
Rating: MARKET PERFORM

New Approval. Yesterday, MustGrow announced the Company received Health Canada’s Pest Management Regulatory Agency (PMRA) approval to commence large-scale field trials via NexusBioAg’s 2024 BioAdvantage Trials Program (BAT Program). The program will focus on the Company’s TerraMG mustard-derived soil biopesticide technology for use in Canadian canola and pulse crop markets.

NexusBioAg BAT Program. The BAT Program is an industry leading field trialing program with an established process to gather data from large field scale trials across Canada. NexusBioAg, a partner of MustGrow and the operator of the program, validates product efficacy and establishes the product value and opportunity. Through the BAT Program, NexusBioAg farm customers will have access to MustGrow’s mustard plant-based product.

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The GEO Group (GEO/$9.44 | Price Target: $15.00)
Joe Gomes [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Reported Third Quarter Results
Rating: OUTPERFORM

3Q23 Results. Revenue for the quarter came in at $602.8 million, compared to $616.7 million a year ago. Adjusted EBITDA totaled $118.7 million, EPS was $0.16, and adjusted EPS $0.19. In the year ago period, GEO reported $136.2 million, $0.26, and $0.33, respectively. We had forecast $595 million, $125.6 million, $0.21, and $0.21, respectively.

Overcoming ISAP. Population declines under the ISAP program continue to be a headwind, with segment revenue $42.6 million y-o-y. Secure Services revenue was off modestly, while Reentry Services, Managed Only, and Non-residential Services all saw nice increases in revenue.

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Noble Capital Markets Research Reports – Tuesday, November 7, 2023

Companies contained in today’s report:

Alvopetro Energy (ALVOF)/OUTPERFORM – Production takes a turn upward
Bit Digital, Inc. (BTBT)/OUTPERFORM – Network Difficulty in October, However a Positive Environment
CoreCivic, Inc. (CXW)/OUTPERFORM – First Look at 3Q23 Results
Energy Fuels (UUUU)/OUTPERFORM – Uranium Sales Growing as Company Gets Ready To Restart Mining
V2X, Inc. (VVX)/OUTPERFORM – 3Q23 Highlights Include a Record Revenue Quarter

Alvopetro Energy (ALVOF/$6.21 | Price Target: $14.00)
Michael Heim [email protected] | (314) 308-9711
Production takes a turn upward
Rating: OUTPERFORM

Production in the month of October was 1,839 boe/d, up from 1,203 boe/d in September. Production has been anemic in recent months due to partner nomination issues in the Cabure field and demand issues by Bahia Gas. The production increase, and the fact that it largely came from the Cabure field, is a positive indication that Alvopetro’s growth plans are getting back on track. Management has set a near-term goal of reaching 3,000 boe/d and a long-term goal of 5,833 boe/d.

Speaking of growth, results from a new oil well look positive. Alvopetro completed the BL-6 well in the Bom Lugar field. The well is averaging 13 boe/d, more that all other existing oil production. The Bom Lugar field could be an important field for the company as it seeks to expand operations and reduce dependency upon natural gas sales to Bahia Gas. We believe the success of the BL-6 well will lead to management putting additional resources into the Bom Lugar field.

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Bit Digital, Inc. (BTBT/$5.05 | Price Target: $12.00)
Joe Gomes [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Network Difficulty in October, However a Positive Enviornment
Rating: OUTPERFORM

Mining Slightly Down. Bit Digital produced 111.6 BTC during the month, a 14% decrease from last month due to an increase in network difficulty, a power utility mandated maintenance outage that temporarily reduced operating hash rate at one location, and the relocation of miners from one hosting location following the conclusion of that hosting agreement. The Company had an active hash rate of 2.0 EH/s compared to 1.19 EH/s last month.

Staking Side. The Company had approximately 12,752 ETH actively staked in native and liquid staking protocols as of October 31, 2023, with 12,352 ETH natively staked and 400 ETH deployed in liquid staking protocols. Bit Digital earned a blended APY of approximately 4.25% on its staked ETH position for the month compared to roughly 4.1% last month, and earned aggregate staking rewards of approximately 46.08 ETH.

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CoreCivic, Inc. (CXW/$13.42 | Price Target: $15.00)
Joe Gomes [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Network Difficulty in October, However a Positive Environment
Rating: OUTPERFORM

3Q Results. Revenue totaled $483.7 million, up 4.2% year-over-year and up 4.3% sequentially, driven by higher populations and increased per diems. Net income was $13.9 million, or $0.12/sh versus $68.3 million, or $0.58 per share last year. Adjusted EPS was $0.14 for 3Q23 versus $0.08 for 3Q22. Adjusted EBITDA was $75.2 million, up from $68.4 million last year.

ICE Populations. Since the ending of Title 42 on May 11th, overall ICE populations are up 66% through the end of September. CoreCivic ICE populations are up by 4,729, or 84% over the same time frame. We believe this has been driven by management’s foresight in adding staff in anticipation of higher population levels. Reportedly, ICE populations have continued to rise.

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Energy Fuels (UUUU/$6.21 | Price Target: $14.00)
Michael Heim [email protected] | (314) 308-9711
Uranium Sales Growing as Company Gets Ready To Restart Mining
Rating: OUTPERFORM

Higher uranium prices led to increased sales out of inventory. Uranium prices rose during the quarter with spot prices moving into the mid-seventies. While realized prices for Energy Fuel were only $58.18/lb. because of long-term contract pricing, it remains well above production costs, which management describes as “well below $50/lb.” Energy Fuels continues to meet its utility contracts through the sale of uranium out of inventory. Inventory levels (586,000 tonnes) are roughly half of the level at the start of the year (1,027,000 tonnes).

Financial results improve with uranium sales. 2023-3Q results were largely in line with expectations once nonrecurring gains are removed. Of course, the Energy Fuel story has never been about near-term results. Instead, the stock moves on corporate developments. And, while there have been some setbacks (REE supply issues, share dilution), the company has made steady progress. We look for the stock to do well as projections turn into cash flow, and as investors begin to realize the potential of rising uranium prices and the profitability of REE separation.

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V2X, Inc. (VVX/$40.73 | Price Target: $62.00)
Joe Gomes [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
3Q23 Highlights Include a Record Revenue Quarter
Rating: OUTPERFORM

3Q23 Results. Record revenue of $1.0 billion was up 4.5% y-o-y, and above our $965 million forecast. Adjusted EBITDA came in at $64.7 million, versus $79 million in 3Q22 and our $64 million estimate. Adjusted diluted EPS was $0.73 compared to $1.33 last year and our $0.90 estimate.

Some Headwinds. 3Q23 results were impacted by a couple items, including contract mix and performance on certain integrated electronic security programs. In addition, the strong 2Q23 benefitted from the pull forward of some business that was expected to occur in the just completed quarter.

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Noble Capital Markets Research Reports – Monday, November 6, 2023

Companies contained in today’s report:

ACCO Brands (ACCO)/OUTPERFORM – A Mixed Third Quarter
Commercial Vehicle Group, Inc. (CVGI)/OUTPERFORM – What One Hand Gives…
E.W. Scripps (SSP)/OUTPERFORM – Favorable Tailwinds in 2024
Eagle Bulk Shipping (EGLE)/OUTPERFORM – September Quarter Results Near Expectations, Management Locks in More Pricing
Information Services Group (III)/OUTPERFORM – A Mixed Third Quarter but Optimism Remains
Kratos Defense & Security (KTOS)/OUTPERFORM – Third Quarter Results Above Expectation

ACCO Brands (ACCO/$5.05 | Price Target: $12.00)
Joe Gomes [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
A Mixed Third Quarter
Rating: OUTPERFORM

Continued Margin Expansion. Gross profit margin increased 400 basis points to 32.3%, primarily due to the cumulative effect of global price increases and cost reduction actions. Year-to-date, ACCO has delivered 380 basis points of gross margin improvement and is now back to 2019 gross margin rate.

But Environment Is Challenged. Macroeconomic weakness, with prolonged softer global demand for technology accessories, and a stronger U.S. dollar, led to lower than expected sales in the quarter. In addition, major retailers in North America continue to focus on holding lower inventory levels, impacting ACCO revenue. The challenged environment is expected to continue at least through the fourth quarter.

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Commerical Vehicle Group, Inc. (CVGI/$6.16 | Price Target: $12.00)
Joe Gomes [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
What One Hand Gives…
Rating: OUTPERFORM

Moving Forward, but Cyclicality Still Here. CVG is making progress on the business transformation to a less cyclical, higher margin, faster growing business, as evidenced by the 17% y-o-y growth in the Electrical Systems business. But the cyclicality of the Vehicle Solutions business remains, and will be a headwind in 2024.

Continuing to Add New Business. CVG recorded approximately $15 million of new business wins in the quarter, increasing the YTD number to $140 million, almost to the 2023 goal of $150 million of new business wins. The majority of new business wins continue to be within the Electrical Systems segment.

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E.W. Scripps (SSP/$7.20 | Price Target: $17.00)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
Favorable Tailwinds in 2024
Rating: OUTPERFORM

Overachieves Q3 expectations. Total company revenue of $ 566.5 million was in line with our expectations of $567.0 million. But, the company overachieved adj. EBITDA, $100.9 million versus our $84.0 million estimate, with the upside variance split evenly between its Local Media and Network segments. 

Adds color on its sports initiative. Management indicated that its two NHL sports licenses will account for a 4% point increase in its core advertising in the fourth quarter and 3% for the full year 2023. The sports license in Las Vegas allowed the company to flip an ION station to an independent station allowing it to receive substantial retransmission revenue. 

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Eagle Bulk Shipping (EGLE/$41.47 | Price Target: $84.00)
Michael Heim [email protected] | (314) 308-9711
September Quarter Results Near Expectations, Management Locks in More Pricing
Rating: OUTPERFORM

Eagle Bulk Shipping 2023-3Q revenues and earnings were in line with recently updated projections. Eagle reported an average TCE rate of $11,482/day down from $14,367/day in the previous quarter. Eagle continues to command a premium to index rates due to its fleet of newer, scrubber-installed ships.

Management indicated it locked in 68% of 2023-4Q shipping days at a favorable rate of $15,655/day. Guidance for costs per day were largely unchanged from the recently reported quarter. The upcoming jump in TCE rates should result in an improvement in cash flow. Management indicated it will likely use free cash flow to pay down debt. The company fixed additional debt with swaps during the quarter and now estimates that 75% of its debt has been fixed at a rate of 5.2%. 

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Information Services Group (III/$4.31 | Price Target: $11.00)
Joe Gomes [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
A Mixed Third Quarter buy Optimism Remains
Rating: OUTPERFORM

A Miss but Record Quarter. Although revenue was below management’s guidance, it was still a record third quarter on a revenue basis. Business is not being lost, but clients are taking an extended approach to starting projects. We expect this situation to be short-term in nature.

Ventana. We are excited by the opportunities Ventana brings to ISG. In addition to adding to ISG’s recurring revenue stream, Ventana adds some 40 new clients in a new vertical for ISG. We believe there are significant synergistic and cross selling opportunities.

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Kratos Defense & Security (KTOS/$17.25 | Price Target: $18.00)
Joe Gomes [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
What One Hand Gives…
Rating: OUTPERFORM

3Q23 Results. Partially helped by one extra week, third quarter results came in above expectations. Revenue totaled $274.6 million, up 20.1% y-o-y. Adjusted EBITDA came in at $27.7 million, up from $20 million in 3Q22. GAAP EPS loss was $0.01 and adjusted EPS was $0.12, compared to a EPS loss of $0.06 and adjusted EPS of $0.08, respectively, a year ago. We had forecasted $250 million, $20.5 million, breakeven, and $0.09, respectively.

Organic Growth Again the Driver. Kratos generated 20.1% overall organic growth in the quarter. The Government Solutions Segment saw overall revenue increase 22% organically to $217.9 million. The Unmanned Systems segment saw 13.4% organic revenue growth, with revenue of $56.7 million.

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Noble Capital Markets Research Reports – Friday, November 3, 2023

Companies contained in today’s report:

1.800.Flowers.com, Inc (FLWS)/OUTPERFORM – Off To A Good Start
ACCO Brands (ACCO)/OUTPERFORM – First Look into a Mixed Third Quarter
Eledon Pharmaceuticals (ELDN)/OUTPERFORM – Phase 1b Data Shows Safety With An Important Improvement in Kidney Function
Entravision Communications (EVC)/OUTPERFORM – A Tempered, But Still Favorable View
Eskay Mining Corp. (ESKYF)/OUTPERFORM – Observations from the 2023 Diamond Drill Progam
Information Services Group (III)/OUTPERFORM – Reports Results and an Acquisition
Kelly Services (KELYA)/OUTPERFORM – Selling International Staffing Business
Newrange Gold (NRGOF)/OUTPERFORM – Timetable to Close Slips due to Rescheduled Court Hearing
Saga Communications, Inc. (SGA)/OUTPERFORM – Delivering On Its Growth Strategy Initiatives
Seanergy Maritime (SHIP)/OUTPERFORM – Third Quarter Preview

1.800.Flowers.com (FLWS/$8.64 | Price Target: $21.00)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
Off To A Good Start
Rating: OUTPERFORM

Fiscal Q1 results better than expected. Total company revenues of $269.1 million, which declined 11.4% from a year earlier, beat our estimate of $249.9 million, driven by better results in each of its operating segments. The revenue decrease represented a significant moderation from the 17.9% decline in its fiscal Q4. The seasonal adj. EBITDA loss of $22.0 million was better than our loss estimate of $27.8 million. 

Improving margin outlook still favorable. Gross margins in the latest quarter improved 450 basis points from 33.4% to 37.9% due to lower ocean freight costs, moderating commodity prices, and lower inventory write-offs. While ocean freight prices have returned to near pre-Covid levels, there is still significant margin expansion opportunities as commodity prices moderate. We anticipate that full fiscal year 2024 gross margins should improve from 37.5% in 2023 to 39.3% in 2024.

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ACCO Brands (ACCO/$5.18 | Price Target: $12.00)
Joe Gomes [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
First Look into a Mixed Third Quarter
Rating: OUTPERFORM

A Mixed Bag. ACCO’s 3Q23 results were a mixed bag. Global macroeconomic weakness, softer technology accessories product demand, and a stronger U.S. dollar negatively impacted 3Q23 top line. But gross margin improved by 400 basis points, reflecting the continued recovery of margin from pricing actions, as well as cost savings from the Company’s restructuring and footprint rationalization efforts.

3Q23 Results. Net sales for the quarter declined 7.7% to $448.0 million from $485.6 million last year. We had estimated sales of $475 million. Comparable sales fell 9.9%. Net income was $14.9 million, or $0.15 per share, compared to a net loss of $68.7 million, or $0.73, last year. Last year was impacted by a goodwill impairment charge, partially offset by higher restructuring and income tax expense in the current year. Adjusted net income was $23.1 million, or $0.24, compared to $24.1 million, or $0.25, last year.

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Eledon Pharmaceuticals (ELDN/$1.21 | Price Target: 10.00)
Robert LeBoyer [email protected] | (212) 896-4625
Phase 1b Data Shows Safety With An Important Improvement In Kidney Function
Rating: OUTPERFORM

Update From Phase 1b Trial Presented. Eledon presented updated data from its Phase 1b open-label trial testing tegoprubart for prevention of kidney transplant rejection. The data showed tegoprubart was comparable or better than tacrolimus in safety and tolerability, its primary endpoint. One of the secondary endpoints measuring kidney function showed a substantial improvement over tacrolimus. We see this data as a strong positive for tegoprubart.

Tegoprubart Is In Development To Replace Tacrolimus. The calcineurin inhibitor tacrolimus is the current standard of care for preventing transplant rejection. It has a success rate of over 90% first year graft survival, but its side effects include toxicity to the kidney and pancreas. These toxicities cause new onset diabetes and graft failure. The open-label trial tested a regimen with tegoprubart instead of tacrolimus along with the other standard-of-care drugs. 

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Entravision Communications (EVC/$3.81 | Price Target: $12.00)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
A Tempered, But Still Favorable View
Rating: OUTPERFORM

A mixed quarter. Q3 revenues of $274.4 million, a record revenue quarter for the company, was largely in line with our $277.0 million estimate. But, the absence of high margin Political advertising and lower margin revenue mix caused an adj. EBITDA shortfall, $14.2 million versus our $17.0 million estimate. Lower Digital adj. EBITDA accounted for the largest portion of the EBITDA variance. 

Lower Q4 outlook. We are lowering our Q4 total company revenue from $318.0 million to $309.7 million to reflect the company’s current pacings. Based on lower margin assumptions, we are lowering our adj. EBITDA from $25.0 million to $19.0 million. For the year, we are lowering our adj. EBITDA estimate from $69.2 million to $60.4 million. 

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Eskay Mining Corp. (ESKYF/$0.25 | Price Target: $1.25)
Mark Reichman m[email protected] | 561-999-2272
Observations from the 2023 Diamond Drill Program
Rating: OUTPERFORM

Productive drill season. Eskay Mining had a productive 2023 diamond drill and exploration season at its 100% controlled Consolidated Eskay Gold Project. The roughly 6,000 meter drill program centered on seven targets: 1) Cumberland, 2) Scarlet Knob-Bruce Glacier, 3) Tarn Lake, 4) Hexagon-Mercury, 5) Maroon Cliffs, 6) Storie Creek, and 7) TV South. While the company confirmed new precious metal rich volcanogenic massive sulfide (VMS) discoveries, the most significant outcome, in our view, is that the program highlighted the significant exploration potential in the areas between the Cumberland target and the TV-Jeff complex. Tied for second are results from Scarlet Knob and Tarn Lake.

Encouraging results at Cumberland. Cumberland is ~6 kilometers south of the TV deposit and is similarly situated along the east side of the Eskay anticline. Nine holes were completed at the Cumberland target. Several returned promising assays, including Hole CBL23-28 which returned 3.02 grams of gold per tonne, 68.66 grams of silver per tonne, 0.24% copper, 0.74% lead, and 4.86% zinc, or 6.28 grams of gold equivalent, over 15 meters.

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Information Services Group (III/$4.12 | Price Target: $11.00)
Joe Gomes [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Reports Results and an Acquisition
Rating: OUTPERFORM

3Q Results. ISG reported third quarter revenue of $71.8 million, a record for the quarter, although lower than management’s $73-75 million guidance and our estimate of $75 million. Revenue was up 4.3% from last year’s $68.8 with currency translation positively impacting reported revenues by $1.4 million versus the prior year. Revenues from Americas were up 1% to $42.5 million from the prior year, Europe up 14% to $22.1 million, and Asia Pacific down 2% to $7.2 million. Recurring revenue was up 19% in the quarter.

Bottom Line. Net income for the quarter was $3.2 million, or diluted EPS of $0.06, down 42% from $5.6 million last year, or $0.11. We estimated net income of $3.8 million, or EPS of $0.08. Non-GAAP net income was $5.7 million, or diluted EPS of $0.11, compared to $7.2 million, or $0.14, last year. Adjusted EBITDA was $10.6 million, flat with last year, near the low-end of management’s $10.5-$11.5 million guidance.

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Kelly Services (KELYA/$18.36 | Price Target: $25.00)
Joe Gomes [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Selling International Staffing Business
Rating: OUTPERFORM

Selling A Piece. Kelly Services is selling its European Staffing Business to Gi Group Holdings S.P.A. The sale is for cash consideration of €100 million (about $106 million at current exchange rates) with a €30 million earnout based on a multiple of adjusted 2023 EBITDA and payable in 2Q24. The transaction is expected to close in 1Q24.

But Not All. The deal includes Kelly’s European Staffing business across 14 European countries. Notably, Kelly will maintain its global footprint and continue to provide higher margin, higher growth potential MSP, RPO, and FSP solutions to customers in the EMEA region through KellyOCG. As a leading global vendor-neutral provider of talent supply chain strategies and workforce solutions, KellyOCG leverages a network of 3,000 suppliers – including Gi – spanning 140 countries to connect customers across North America, Asia Pacific, and EMEA with top talent.

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Newrange Gold (NRGOF/$0.02 | Price Target: $0.20)
Mark Reichman m[email protected] | 561-999-2272
Timetable to Close Slips due to Rescheduled Court Hearing
Rating: OUTPERFORM

Transaction to form Pinnacle Silver & Gold Corp. In May,Newrange executed a binding Scheme Implementation Deed (SID) to acquire 100% of Mithril Resources Limited (ASX: MTH) in a reverse takeover (RTO). Pending approval by the TSX Venture Exchange, the resulting company will be named Pinnacle Silver & Gold Corp. and will be listed on the TSX Venture exchange under the symbol “PINN.” During their respective special meetings, Newrange and Mithril shareholders approved the merger between Newrange and Mithril to form Pinnacle Silver & Gold Corporation. Assuming that all requirements are satisfied, the transaction could close in late November or early December.

Key conditions remain. Although both sets of shareholders have approved the transaction, several requirements remain outstanding. These include: 1) the Federal Court of Australia must approve the transaction, 2) an Independent Expert must affirm that in the absence of a superior offer, the share and option schemes are in the best interests of Mithril shareholders and option holders, 3) completion of Newrange Gold’s concurrent financing, 4) Newrange Gold receiving unconditional approval to re-list on the TSX Venture Exchange, and 5) satisfaction or waiver of any remaining conditions prior to the Court hearing.

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Saga Communications, Inc. (SGA/$19.34 | Price Target: $27.00)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
Delivering On Its Growth Strategy Initiatives
Rating: OUTPERFORM

Solid Q3 results. The company reported Q3 revenue of $29 million, and adj. EBITDA of $5 million, both of which were in-line with our estimates of $28.9 million and $5 million, respectively. Notably, the company’s national advertising revenue was up 1% in the quarter, which is virtually unheard of among its peers. We believe that the company will have among the best Q3 results in the industry. 

Best in class. Management indicated that its Digital businesses grew a strong 34% in the quarter, likely to exceed the industry. Notably, the company’s national advertising revenue is up an impressive 6.9% year-to-date. In addition to the company’s industry leading digital revenue growth and resilient national advertising revenues, the company has a pristine balance sheet with no long term debt. 

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Seanergy Maritime (SHIP/$5.10 | Price Target: $10.00)
Michael Heim [email protected] | (314) 308-9711
Third Quarter Preview
Rating: OUTPERFORM

Lower shipping rates will push revenues down modestly. We have lowered our 2023-3Q revenue projections modestly to reflect a drop in shipping rates in the later half of the quarter. After a sharp decline in pricing in 2022, the dry bulk shipping market has shown signs of improving several times only to have pricing slip back down. Such was the case in the third quarter which began the period on a high note only to see pricing fall. Issues in China, the war in Ukraine, and general economic malaise are the causes cited most often for pricing weakness.

Lowering non-contracted shipping rates reduces our revenue projections, earnings projections largely unchanged. We have lowered our assumed shipping rate for non-contracted shipping days in the quarter to $16,500 from $17,000. In response, we have lowered our revenue estimate to $24.4 million from $24.8 million. Lower revenues, combined with an increase in stock-based compensation due to a higher SHIP stock price, were offset by the elimination of losses on the extinguishment of debt. The result is only a modest change to our EPS estimate which now calls for an adjusted EPS loss of $0.15 versus our previous estimate of $0.16 per share. We expect the company to report results on November 14th.

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Noble Capital Markets Research Reports – Thursday, November 2, 2023

Companies contained in today’s report:

Beasley Broadcast Group (BBGI)/OUTPERFORM – Constructive On A Strong Rebound in 2024
Commercial Vehicle Group, Inc. (CVGI)/OUTPERFORM – 3Q23 First Look

Beasley Broadcast Group (BBGI/$0.74 | Price Target: $2.50)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
Constructive On A Strong Rebound in 2024
Rating: OUTPERFORM

A noisy quarter. Q3 total revenues were $60.1 million, slightly less than our $61.3 million estimate. Adj. EBITDA was $5.5 million, 13% below our $6.3 million estimate. The company had non cash charges in the quarter which created a lot of noise in its earnings.

Some green shoots. The company indicated that September revenue increased 2.1% excluding Political revenues. In addition, national advertising appears to be moderating, down 8%, ex Political, versus down 20% in the first half 2023. Furthermore, the company generated a significant $8 million in new direct business in the quarter.  

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Commercial Vehicle Group, Inc. (CVGI/$6.93 | Price Target: $12.00)
Joe Gomes [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
3Q23 First Look
Rating: OUTPERFORM

3Q23 Results. Revenue of $246.7 million was down 1.9% y-o-y, and slightly below our $255 million estimate, mostly due to a COVID related backlog in Asia-Pacific last year that was not repeated this year. Adjusted EBITDA came in at $16.6 million, up 16.1% y-o-y, and in-line with our $17 million estimate. GAAP and adjusted net income was $7.3 million, or $0.22/sh, compared to GAAP $3.6 million, or $0.11/sh, and adjusted $5.1 million, or $0.15/sh, last year. We had forecast net income of $7.2 million, or $0.21/sh.

Segments. Vehicle Solutions revenue was $145.4 million compared to $154 million last year, while operating income was $10.9 million versus $9.6 million. Electrical Systems revenue was $53.9 million versus $46.1 million and operating income grew to $5.9 million from $5.2 million. Aftermarket revenue was $34.4 million, down from $37.1 million and operating income was $4.5 million compared to $5.0 million. Industrial Automation revenue was $13.0 million compared to $14.1 million and segment operating income was $0.7 million compared to an operating loss of $1.0 million last year.

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Noble Capital Markets Research Reports – Wednesday, November 1, 2023

Companies contained in today’s report:

Comstock Inc. (LODE)/OUTPERFORM – Development Plans Move into Clearer View
MustGrow Biologics Corp. (MGROF)/MARKET PERFORM – TerraSante Receives USDA Organic Approval
Cocrystal Pharma (COCP)/OUTPERFORM – Updating 3Q23 Estimates

Comstock Inc. (LODE/$0.41 | Price Target: $4.00)
Mark Reichman m[email protected] | 561-999-2272
Development Plans Move into Clearer View
Rating: OUTPERFORM

Comstock Fuels strategy becomes more apparent. During Comstock’s third quarter update, Mr. William McCarthy, COO, discussed Comstock Fuels’ recent achievements and plans to build and own the first Bioleum hub with a goal to develop and license future hubs to third parties. The goal is to ultimately be involved with developing and licensing 99 additional Bioleum hubs to collectively produce 2.5 billion gallons of advanced biofuel with low carbon intensity using 25 million tonnes of biomass.

Comstock Metals photovoltaics recycling facility. Comstock Metals is deploying a demonstration system to commercialize technologies for use in efficiently crushing, conditioning, extracting, and recycling metal concentrates from photovoltaics and other electronic devices. Comstock Metals has submitted all permits for operating its manufacturing facility in Silver Springs, Nevada, and expects the receipt of permits and full deployment of its entire production system by the end of 2023. Operations are anticipated to commence in early 2024. Comstock Metals expects initial supply-revenue agreements in advance of production.

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MustGrow Biologics Corp. (MGROF/$1.00 | Price Target: N/A)
Joe Gomes [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
TerraSante Receives USDA Organic Approval
Rating: MARKET PERFORM

Receiving Approval. MustGrow announced yesterday that the Company has been awarded an organic compliance certification from the USDA National Organic Program for its TerraSante crop fertilizer and soil amendment technology. The product is now OMRI Listed in the following Generic Material Listings: NOP: Plant Extracts, Class: Crop Fertilizers and Soil Amendments.

A Potential Boon to US Farmers. The Organic Materials Review Institute’s (OMRI) organic certification can potentially provide an opportunity for farmers to reduce synthetic chemical and fertilizer use while meeting growing market demand for organic biological products. It involves a strict review of product ingredient composition and observance of manufacturing compliance standards required in organic production in which, upon final registration of product approval from U.S. state agencies, TerraSante will be marketed with “OMRI listed for organic use”.

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Cocrystal Pharma (COCP/$1.71 | Price Target: $5.00)
Robert LeBoyer [email protected] | (212) 896-4625
Phase 2a Influenza Trial Receives Authorization To Begin
Rating: OUTPERFORM

Phase 2a Trial Expected To Begin In The UK Before Year-End. Cocrystal announced that it has received authorization from the United Kingdom’s Medicines Health and Regulatory Agency to begin its Phase 2a clinical trial. This Phase 2a trial will be conducted in the UK and test CC42344 in seasonal and pandemic influenza. The trial is expected to begin before the end of 2023 with results expected around mid-2024.

Study Was Designed To Test Human Volunteers In A Controlled Setting. The study will be a single-center, placebo-controlled study designed to challenge healthy human volunteers with influenza A. Subjects will receive pharmaceutically-produced influenza A virus on the first day. This will be followed 24 hours later by either CC-42344 or placebo once daily for 5 days. Endpoints in the trial are changes in viral load, symptoms, and biomarkers, as well as safety and tolerability.

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Noble Capital Markets Research Reports – Tuesday, October 31, 2023

Companies contained in today’s report:

Xcel Brands (XELB)/OUTPERFORM – A License To Grow, Profitably
Great Lakes Dredge & Dock (GLDD)/OUTPERFORM – Updating 3Q23 Estimates
GeoVax Labs Inc. (GOVX)/OUTPERFORM – Clinical Trial Expansion Continues With A Stream Of Milestones

Xcel Brands (XELB/$1.04 | Price Target: $3.50)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
A License To Grow, Profitably
Rating: OUTPERFORM

Initiating coverage with Outperform rating and $3.50 price target. Xcel Brands is a fashion apparel company, boasting several well-known and iconic brands, such as Isaac Mizrahi and Halston. In our view, the company is on the cusp of a new, profitable growth era, after its recent business model transformation to an asset-light, brand licensor.

Business model transformation. The new licensing business model is expected to significantly lower the company’s costs, eliminating warehousing and inventory costs as well as capital expenditure needs. We believe this repositioning of the business is a key catalyst for the company to swing towards positive cash flow generation later this year.

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Great Lakes Dredge & Dock (GLDD/$7.54 | Price Target: $11.00)
Joe Gomes [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Updating 3Q23 Estimates
Rating: OUTPERFORM

Updating 3Q23 Estimates. On the heels of Orion Group’s release late last week, we are adjusting our third quarter 2023 projections for Great Lakes downward. On its earnings call, Orion management noted the ongoing sluggishness in Army Corps of Engineers dredging awards. As a result, competition for business has increased. We suspect Great Lakes has been impacted to some degree by the market conditions.

Updated Projections. On the revenue side, we are lowering our estimate to $137 million from a prior $145 million. With reduced utilization, we also are decreasing our gross margin estimate. Net net, our projected quarterly net loss projection is now $6 million, or a loss of $0.09 per share, compared to a previous estimated loss of $3.0 million, or a loss of $0.04 per share. Our adjusted EBITDA estimate declines to $8 million from $11.5 million.

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GeoVax Labs Inc. (GOVX/$0.49 | Price Target: $6)
Robert LeBoyer [email protected] | (212) 896-4625
Clinical Trial Expansion Continues With A Stream Of Milestones
Rating: OUTPERFORM

Site Expansion Should Increase Rate Of Enrollment. GeoVax announced the additional of new clinical sites in the Phase 2 trial for CM04S1, its COVID-19 vaccine to protect patients who are immunocompromised due to treatment for hematological malignancies. Patients who receive treatments including allogenic/autologous stem cell transplant or CAR-T therapy have difficulty responding to the available COVID-19 vaccines, leaving them vulnerable.

Site Expansion Should Increase Speed of Enrollment.  The trial is designed to compare the safety and immunogenicity of CM04S1 directly against the mRNA vaccines from Pfizer and Moderna. The trial began at the City of Hope Medical center in California and will begin treating patients at Wake Forest Baptist Medical Center (North Carolina), University of Massachusetts Medical Center, and Fred Hutchinson Cancer Research (Washington). Patient enrollment at these sites should increase the enrollment rate and number of patients in the study, providing greater statistical significance with shortened time to results.

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Noble Capital Markets Research Reports – Monday, October 30, 2023

Companies contained in today’s report:

Alliance Resource Partners (ARLP)/OUTPERFORM – Third Quarter Negatively Impacted by Lower Coal Sales Volume and Higher Costs
Cumulus Media (CMLS)/OUTPERFORM – In The Midst of The Advertising Trough
FAT Brands Inc. (FAT)/OUTPERFORM – Reports Third Quarter Results Newrange Gold (NRGOF)/OUTPERFORM – Shardholders Approve Merger with Mithril; Not Yet a Done Deal
Orion Group Holdings (ORN)/OUTPERFORM – Expecting the Momentum to Continue

Alliance Resource Partners (ARLP/$22.48 | Price Target: $30.00)
Mark Reichman m[email protected] | 561-999-2272
Third Quarter Negatively Impacted by Lower Coal Sales Volume and Higher Costs
Rating: OUTPERFORM

Third quarter financial results. Alliance reported third quarter EBITDA and earnings per unit (EPU) of $227.6 million and $1.18, respectively, compared to $253.8 million and $1.25 during the prior year period. We had forecast EBITDA and EPU of $240.3 million and $1.20. Revenue increased 0.6% to $636.5 million, while income from operations declined 8.7% to $165.4 million. The company generated free cash flow of $123.7 million and distributable cash flow provided quarterly cash distribution coverage of 1.75x. Third quarter financial results were negatively impacted by lower coal sales volumes and higher costs at its coal operations in Appalachia.

Refined management guidance. Alliance provided updated guidance for the remainder of the year which we have incorporated into our estimates as detailed in the body of this note. Total coal sales are expected to be in the range of 34.5 million to 35.0 million tons compared to previous expectations of 35.5 million to 36.0 million tons, while the coal sales price per ton is expected to be in the range of $64.50 to $66.00 compared to previous guidance of $65.00 to $66.00. Segmented adjusted EBITDA expense per ton sold is expected to be $39.50 to $40.50 compared to previous guidance of $38.00 to $41.00.

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Cumulus Media (CMLS/$4.77 | Price Target: $11)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
In The Midst Of The Advertising Trough
Rating: OUTPERFORM

In-line quarter. Revenues of $207.4 million, down 11.2% from year earlier levels, were in line with our $207.8 million estimate. Costs came in lower than expected, and, as a result, adj. EBITDA was 14.1% better than expected at $26.9 million versus our $23.6 million estimate. 

Green shoots? The company completed a successful upfront with strong Network sales. We believe that cancellations will be much less than the 50% that it experienced last year, which should provide for the prospect for a meaningful turnaround in its high margin Network business in 2024. 

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FAT Brands Inc. (FAT/$5.76 | Price Target: $25.00)
Joe Gomes [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Reports Third Quarter Results
Rating: OUTPERFORM

3Q23 Results. FAT Brands reported 3Q23 revenue of $109.4 million, up 6% y-o-y from $103.2 million in the year ago quarter. System-wide sales growth was 0.8%. FAT reported adjusted EBITDA of $21.9 million in the quarter, compared to $24.6 million in 3Q22 (which included $7.2 million of tax credits). Net loss for the quarter was $26.5 million, or $1.59/sh, compared to a net loss of $25.1 million, or $1.52/sh last year. Adjusted net loss for the quarter was $18.9 million, or $1.14/sh, compared to a net loss of $17.9 million, or a loss of $1.08/sh, last year. We had projected revenue of $107 million and a net loss of $28.4 million, or a loss of $1.71/sh.

Ongoing Development. YTD, FAT has opened 96 restaurants, including 30 in 3Q. The Company expects to see 150 openings 2023. YTD, over 200 new franchise agreements have been signed, bringing the total pipeline to over 1,100 signed agreements. This pipeline will add some $60 million to adjusted EBITDA.

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Newrange Gold (NRGOF/$0.02| Price Target: $0.20)
Mark Reichman m[email protected] | 561-999-2272
Shareholders Approve Merger with Mithril; Not Yet a Done Deal
Rating: OUTPERFORM

Transaction wins shareholder approval. In May,Newrange executed a binding Scheme Implementation Deed (SID) to acquire 100% of Mithril Resources Limited (ASX: MTH) in a reverse takeover (RTO). Pending approval by the TSX Venture Exchange, the resulting company will be named Pinnacle Silver & Gold Corp. and will be listed on the TSX Venture exchange under the symbol “PINN.” During their respective special meetings, Newrange and Mithril shareholders approved the merger between Newrange and Mithril to form Pinnacle Silver & Gold Corporation. Assuming that all requirements are satisfied, the transaction is expected to close in mid-November.

Key conditions remain. Although both sets of shareholders have approved the transaction, several requirements remain outstanding. These include: 1) the Federal Court of Australia must approve the transaction at a hearing scheduled for November 6, 2) an Independent Expert must affirm that in the absence of a superior offer, the share and option schemes are in the best interests of Mithril shareholders and option holders, 3) completion of Newrange Gold’s concurrent financing, 4) Newrange Gold receiving unconditional approval to re-list on the TSX Venture Exchange, and 5) satisfaction or waiver of any remaining conditions prior to the Court Hearing.

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Orion Group Holdings (RICK/$4.48 | Price Target: $6.00)
Joe Gomes [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Expecting the Momentum to Continue
Rating: OUTPERFORM

Momentum. While top line in the third quarter was impacted by a more measured pace of award roll-out and the withdrawal from the Central Texas market, operating momentum continued, driven by implementation of management’s operating plan and an increasing mix of higher margin projects. We expect the momentum to continue going forward.

Marine Segment. Marine segment revenue was up 6.3% y-o-y driven by the Hawaii contract. Partly due to recognition of outstanding claims in the year-ago quarter, segment operating profit fell to $2.0 million, or a 2.5% margin, from $5.2 million, or a 6.8% margin last year. Orion is winning new awards in the segment at higher margins, but the Army Corps continues to award business at a slower than historical rate.

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Noble Capital Markets Research Reports – Friday, October 27, 2023

Companies contained in today’s report:

RCI Hospitality Holdings (RICK)/OUTPERFORM – Extending Debt to Free Up Cash for Share Repurchases

RCI Hospitality Holdings (RICK/$52.70 | Price Target: $125.00)
Joe Gomes [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Extending Debt to Free Up Cash for Share Repurchases
Rating: OUTPERFORM

A Modification. RCI announced the Company modified $15.7 million in debt due October 2024 through extending maturities of the notes to free up more cash to buy back shares. The notes will continue to be unsecured at 12% interest, with $9.1 million due October 1, 2026, interest-only payable monthly, and $6.6 million due November 1, 2027, with monthly payments of interest and principal based on a 10-year amortization.

Buying Up Shares. With the modification in place for the debt, the Company has over $15 million to buy back shares. Using the Company’s closing price on October 26 of $52.70, RCI can purchase up to 297,912 shares. If the Company were to do so, this lowers the Company’s outstanding shares to roughly 9.1 million. 

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Noble Capital Markets Research Reports – Thursday, October 26, 2023

Companies contained in today’s report:

Lithiumbank Resources (LBNKF)/OUTPERFORM – Recent Financing Provides Flexibility to Accelerate Progress at Boardwalk and Park Place
Orion Group Holdings (ORN)/OUTPERFORM – Improving on its Margins
Eledon Pharmaceuticals (ELDN)/OUTPERFORM – C-Suite Interview With Eledon CEO Available On ChannelChek

Lithiumbank Resources (LBNKF/$0.63 | Price Target: $2.75)
Mark Reichman m[email protected] | 561-999-2272
Recent Financing Provides Flexibility to Accelerate Progress at Boardwalk and Park Place
Rating: OUTPERFORM

Private placement oversubscribed. LithiumBank recently closed a private placement of 3,506,500 units at a price of C$1.00 per unit. Originally, the company had planned to raise C$2 million, which was later increased to C$3 million. Each unit is comprised of one common share of the company and one-half of one common share purchase warrant. Each warrant entitles the holder to purchase an additional share at a price of C$1.50 per share for a period of 24 months from the date of issuance. Coupled with over C$6 million designated for exploration, the financing provides discretionary funds to advance LithiumBank’s Boardwalk and Park Place projects and accelerate pilot plant testing with G2L Greenview Resources.

Significant insider participation. Demonstrating their own commitment and confidence in LithiumBank, insiders of the company purchased 970,000 units or 27.66% of the total units offered in the private placement. Mr. Gianni Kovacevic, Director, purchased 250,000 units, Mr. Christopher Murray, Director, purchased 250,000 units, Mr. Paul Matysek, Executive Chairman and Director purchased 150,000 units, Ms. Ekaterina Zotova, Director, purchased 150,000 units, Mr. Rob Shewchuk, CEO and Director, purchased 100,000 units, Mr. Kevin Piepgrass, COO, purchased 40,000 units, Mr. Steven Piepgrass, Director, purchased 20,000 units, and Ms. Ann Fehr, CFO, purchased 10,000 units.

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Orion Group Holdings (ORN/$5.11 | Price Target: $6.00)
Joe Gomes [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Improving on its Margins
Rating: OUTPERFORM

Third Quarter Results. Revenue for Orion was $168.5 million, a 7.7% decrease from $182.6 million last year reflecting the exit of the Central Texas concrete market. Adjusted net income for the quarter was $0.8 million, or diluted EPS of $0.02, flat with last year. Adjusted EBTIDA was $9.4 million compared to $8.8 million in the previous year.

Better Margins. Although revenue decreased year-over-year, Orion showcased better margin improvement in its gross and adjusted EBITDA margins through taking higher quality projects and better execution. Gross margin improved to 11.3% from 7.4% last year and adjusted EBITDA to 5.6% from 4.8%. We believe margin improvement can continue as the Company further implements its current strategy and executes it, and puts another feather in the Company’s cap heading into the new year.

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Eledon Pharmaceuticals (ELDN/$1.43 | Price Target: $10)
Robert LeBoyer [email protected] | (212) 896-4625
C-Suite Interview With Eledon CEO Available on ChannelChek
Rating: OUTPERFORM

Our Discussion Included Eledon’s Science, Markets, and Company Strategy.  We recently spoke with the Eledon CEO, Dr. DA Gros, as part of our C-Suite Interview Series. Our interview included the scientific principles on which tegoprubart is based, the unmet need in kidney transplantation, and the current clinical trials. Dr. Gros also discussed additional tegoprubart indications, company finances, and future milestones.

Eledon Is Pursuing An Unmet Need In Kidney Transplantation. Dr. Gros described how tegoprubart blocks a step in the immune response that has applications in many immune disorders. The first application in development is for prevention of kidney transplant rejection, where the current standard of care drugs are effective but have toxic side effects that lead to organ failure after 10 to 12 years. Tegoprubart is currently in two clinical trials for this indication.

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Noble Capital Markets Research Reports – Wednesday, October 25, 2023

Companies contained in today’s report:

DLH Holdings (DLHC)/OUTPERFORM – Reports Key Metrics for Fiscal 2023 Year End
MAIA Biotechnology (MAIA)/OUTPERFORM – THIO0-101 Data Update Shows Improved Disease Control Rates
Travelzoo (TZOO)/OUTPERFORM – Entering A More Normalized Growth Period

DLH Holdings (DLHC/$13.01 | Price Target: $21)
Joe Gomes [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Reports Key Metrics for Fiscal 2023 Year End
Rating: OUTPERFORM

Key Metrics. Yesterday, DLH Holdings released some key metrics for the fiscal year ended September 30, 2023. The Company expects to release full audited financial results on December 6th. We will update our models following the full release.

Revenue. The preliminary 4Q23 revenue estimate is $100 million, which would be below our $103 million estimate and the $104 million consensus estimate, up from $67.2 million in 4Q22. The increase was driven by the GRSi acquisition. The legacy contract portfolio grew modestly. We believe the slow roll out of work under recently won ID/IQs negatively impacted quarterly revenue growth. 

Facility Rationalization. During the quarter, the Company reduced its leased office space, consolidating underutilized premises. DLH will take an approximate $8 million non-cash impairment charge in the quarter as a result, but the Company should save approximately $1 million annually going forward.

Debt Reduction. Debt reduction is ahead of schedule. Total debt at fiscal year end was $179.4 million compared to $207.6 million following the acquisition of GRSi in December 2022, outperforming management expectations of $186.4 million. We expect debt reduction to continue to be a focus of free cash flow use going forward.

Maintaining Outperform and $21 PT. We are maintaining our Outperform rating and $21.00 price target, given the solid future growth opportunities. We believe DLHC shares represent a favorable risk/reward opportunity. At our price target, DLHC shares would trade at 11.8x our fiscal 2023 adjusted EBITDA estimate and 1.3x our fiscal 2023 revenue estimate.

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MAIA Biotechnology (MAIA/$2.03 | Price Target: $14)
Robert LeBoyer [email protected] | (212) 896-4625
THIO0-101 Data Update Shows Improved Disease Control Rates
Rating: OUTPERFORM

ESMO Data Shows Unusually High Survival Rates. MAIA Biotechnology presented preliminary data from the THIO-101 trial in non-small cell lung cancer (NSCLC) at the European Society for Medical Oncology conference. The disease control rate (DCR) reached 100% in second line patients compared with about 53% to 64%  for standard of care therapies. DCR for third line patients reached 88%, compared with about 30% expected. We see these results as extremely strong, and believe DCR could correlate with overall survival (OS), a primary endpoint of the trial.

Preliminary Data Shows Strong Response. The results showed a disease control rate (DCR, consisting of complete responses, partial responses, or stable disease) of 100% or 19 out of 19 patients in second line therapy and 88% or 14 out of 16 patients in third line. Published data from 74 clinical trials with standard of care therapies show 53% to 64% DCR in second line and about 30% in third line. We see this as a substantial improvement over results from standard of care therapies.

Patients In The Trial Are Still In The Follow-Up Stage. The first 2 subjects that entered the trial both received THIO as a 3rd line of treatment. These patients had reported survival of 14.6 and 12.5 months, compared with expected survival of about 3 to 6 months. At the time of assessment, 37 subjects completed at least 1 post-baseline evaluation with 26 of 37 (70%) patients still on treatment. Many have been treated recently with a median duration of treatment of 12.4 weeks (range 3.4 – 28.4 weeks). Out of these patients, partial responses (PRs) were reported for 6 subjects, with 2 PRs confirmed by a 2nd scan.

Conclusion. We see the updated data as a strong sign of initial efficacy for the THIO-101 trial. As the Additional data MAIA recently announced clearance of the IND to start clinical trials in the US and increase enrollment in THIO-101. Top-line overall response data this stage of the trial is expected toward year-end to early 1Q, with the THIO-102 Phase 2 trial in in colorectal cancer, liver cancer, and solid tumors expected to begin around year-end.

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Travelzoo (TZOO/$6.53 | Price Target: $13)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
Entering A More Normalized Growth Period
Rating: OUTPERFORM

Upside surprise. Q3 revenue of $20.6 million, which increased 30.0% year over year, was better than our $18.9 million estimate and reflected strong revenue growth in its Europe operations (+35.5%) and North America (+27.4%). Q3 adj. EBITDA beat expectations, $3.9 million versus our $3.1 million estimate. 

Margin improvement. Adj. EBITDA margins were 18.7%, up significantly from the year earlier margins of 7.1%, reflecting the improved revenue performance and the company’s diligence on keeping costs low and its earlier significant cuts in its infrastructure footprint.    

Estimate revisions. We are largely keeping our full year 2023 adj. EBITDA estimate. We revised the Q3 upside out of our Q4 estimate, conservatively looking for a more “normal,” but attractive revenue growth phase. We raised our EPS expectations to reflect the recent 1 million share repurchase. 

Improving balance sheet. As of Sept. 30, the company had $15.9 million in cash and $23.7 million in merchant liabilities. Merchant liabilities would have been lower, but voucher sales increased in Europe unexpectedly. Nonetheless, the ratio of cash to merchant liabilities improved in the quarter. Management expects that its cash position will increase and, in fact, be more than merchant liabilities in coming quarters. The board approved another 1 million share repurchase authorization. 

Attractive stock valuation. We believe that the TZOO shares rightfully increased nearly 25% following the favorable Q3 results. The shares were oversold, nearly halved from recent highs in June 2023. Near current levels, in spite of the recent advance, the shares trade at 4.8 times EV to our 2024 adj. EBITDA estimate, well below historic trading ranges. We rate the shares Outperform with a $13 price target. 

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Noble Capital Markets Research Reports – Tuesday, October 24, 2023

Companies contained in today’s report:

AZZ Inc (AZZ)/OUTPERFORM – Model Adjustments
Bit Digital, Inc. (BTBT)/OUTPERFORM – A New AI Business
Eagle Bulk Shipping (EGLE)/OUTPERFORM – September Quarter Preview
Permex Petroleum (OILCF)/OUTPERFORM – Permex completes share consolidation and announces public offering.

AZZ Inc (AZZ/$44.89 | Price Target: $60)
Michael Heim [email protected] | (314) 308-9711
Model Adjustments
Rating: OUTPERFORM

We have updated our models to reflect reported August quarter financial results. We are fine tuning our models to reflect August quarter results. We have raised our sales projections modestly to reflect anticipated growth in the Precoat division in the February quarter, typically the weakest quarter for the company. We now project Precoat sales and overall sales in the fourth quarter of $195 million and $345 million, respectively.

We have trimmed margins a bit. We have lowered our gross margin and EBITDA margin assumptions for the third and fourth quarter. Our margin assumptions now show improvement over previous year results, but now allow for a decrease in margins in the winter quarters relative to the summer quarters to reflect lower sales.

Earnings per share estimates are largely unchanged. The combination of higher sales and more conservative margin assumptions has little impact on our earnings projections. We remains within management guidance for the earnings for the year. With this report, we are initiating fiscal 2025 quarterly estimates.

Rating remains outperform with a $60 price target. Our basic investment premise for AZZ remains intact. We look for AZZ’s valuation multiples to expand towards peer group averages as it grows and reduces it debt.

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Bit Digital, Inc. (BTBT/$2.19 | Price Target: $4.5)
Joe Gomes [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
A New AI Business
Rating: OUTPERFORM

Business Diversification. Bit Digital is launching a new AI-focused business, Bit Digital AI, that will provide specialized infrastructure to support generative artificial intelligence (AI) workstreams. The new business materially diversifies Bit Digital’s revenue sources with a goal of providing a non-correlated income stream to help offset potential downturns in the core bitcoin mining and ETH staking business.

A Customer Contract. Bit Digital has entered into a binding term sheet with a customer to support their GPU-accelerated workloads. Bit Digital will provide the customer with rental services for a minimum of 1,024 GPUs and a maximum of 4,096 GPUs. The total number of GPUs, contract length, and corresponding unit pricing will be determined upon signing of the master service agreement.

Potential. For the minimum 1,024 GPUs, the contract is expected to generate between $23-$27 million in annual revenue. The maximum contract value for 4,096 GPUs with a three-year contract term exceeds $250 million, at substantially higher margins than the existing mining business. Revenue is expected to begin in January 2024.

Benefits. We view the new business line as a significant non-correlated income stream that will help Bit Digital weather potential disruptions in the BTC mining and ETH staking businesses, key with the uncertainty of bitcoin halving coming in Spring 2024. With interest from additional interested parties already, the potential exists for the new line to scale relatively quickly.

Maintaining Outperform. We are maintaining our Outperform rating and $4.50 price target. The step into AI should provide business diversification, with the Company now involved in two growth opportunities, cryptocurrency mining and staking operations through two blue chip tokens in Bitcoin (BTC) and Ethereum (ETH) and the new AI focused business.

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Eagle Bulk Shipping (EGLE/$41.61 | Price Target: $84)
Michael Heim [email protected] | (314) 308-9711
September Quarter Preview
Rating: OUTPERFORM

Shipping rates remain low but are improving. Eagle shipping rates remained low in the third quarter. Eagle has fixed approximately 66% of its shipping days for the quarter at a TCE rate near $10,900/day. Rates for unfixed shipping days dipped early in the quarter below fixed rates but exited the quarter closer to $14,000 giving hope that fourth quarter results will show improvement. We are lowering our assumed TCE rate for unfixed days to $10,500 from $12,000.

Operating costs should be fairly steady but interest costs rise. With 2023-2Q results, management provided guidance for operating costs per ownership days for the third quarter that were similar to the second quarter. One exception was interest expense which increased several million dollars with debt levels rising as part of a share repurchase program. We are increasing our estimated interest expense for the quarter and going forward.

Keep an eye on the Middle East conflict. Conflict in the Middle East does not have a significant direct impact on dry bulk shipping unless it leads to a slowdown in the global economy. If the conflict should spread to neighboring countries (say if the Suez Canal were to shut down), it could lead to rerouting of ships. Such a development could increase the number of shipping days needed to move product and be a net positive for shipping companies.

Shipping stocks like Eagle are trading well below net asset value but are positioned to rise. Shipping stocks are depressed due to 12-18 months of low shipping rates. With rates starting to improve, we believe stock prices will improve. We continue to rate the shares of Eagle Bulk Shipping as Outperform with a $84 price target.

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Permex Petroleum (OILCD/$1.74 | Price Target: $40)
Michael Heim [email protected] | (314) 308-9711
Permex completes share consolidation and announces public offering.
Rating: OUTPERFORM

Permex completed a 1 for 4 common share consolidation. The consolidation, which was effective October 23, 2023, was initially announced on October 19, 2023. The consolidation affects Permex shares on the Canadian Securities Exchange (CSE), the Frankfurt Stock Exchange and the OTCQB. With the consolidation, the number of outstanding shares has been reduced from approximately 2 million to 400,000. The consolidation was needed to be listed on the Nasdaq Capital Market. If completed at an assumed post-consolidation price of $7.64 per share, the offerings would generate $29 million.

Permex to issue common equity and warrants. On October 20, 2023, Permex filed a prospectus to issue up to 1.9 million common units with accompanying warrants and to issue up to 1.9 million pre-funded units and warrants. The warrant associated with the common units does not have a set exercise price, which we will assume will be near the common stock offer price. The warrants for the pre-funded common shares will have an exercise price of $0.01 per share. The new shares, if approved, will trade on the Nasdaq Capital Market under the symbols OILS and OILSW.

Why is Permex doing this? Permex has valuable assets in the Permian Basin, but has struggled to finance the drilling of its wells. An offering associated with an uplisting to the NYSE was pulled last fall. Since then, the share price has continued to fall as management and operating costs ate into the company’s cash position with no new wells (and thus revenue) coming on line. The offering should allow Permex to go forward with converting a recent vertical well into a horizontal well and drill additional wells. 

We are adjusting our numbers to reflect the consolidation and offering. We have restated historical results to reflect the 1-4 stock split. We are raising our price target to $40 from $20, which reflects both the conversion and dilution associated with the offering. We continue to rate the shares of Permex Outperform.

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Noble Capital Markets Research Reports – Monday, October 23, 2023

Companies contained in today’s report:

Direct Digital Holdings (DRCT)/OUTPERFORM – Investor Meeting Highlights

Direct Digital Holdings (DRCT/$2.62 | Price Target: $6)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
Investor Meeting Highlights
Rating: OUTPERFORM

Highlights from investor meetings. This report provides highlights from a non-deal roadshow with investors last week in New York, Miami, and Boca Raton with Keith Smith, Co-Founder and President, and Diana Diaz, Chief Financial Officer. 

Reiterating full year guidance. Management appeared sanguine about at least hitting expectations on revenue and operating cash flow (adj. EBITDA) for the full year 2023. Revenues are expected to increase roughly 43% to $128.1 million, in line with management’s guidance. Adj. EBITDA in 2023 is expected to be $9.0 million, growing 25% to $11.3 million in 2024.  

Lots of room to grow. The company is a relatively small fish in a very large digital sea. The company’s growth is a function of growing advertising impressions and by increasing conversion rates, which are currently roughly 2%. Moving conversion rates to 6%, the current industry average, would provide substantial, profitable revenue growth. 

Clearing the runway. The company recently repurchased 2.2 million warrants for roughly $2.6 million. Given that the company was able to purchase over 50% of the outstanding warrants, it has the right to purchase the remaining 1 million warrants. While the warrants exercise price was $5.50 (at the IPO price), we believe that the repurchase clears the runway for higher stock valuations as the company’s executes on its growth strategy. 

Attractive valuation. Near current levels, the DRCT shares trade at 4.8 times Enterprise Value to our estimated 2024 adj. EBITDA estimate, well below the average 12.4 times for its industry’s peers. Notably, stocks in its sector trade as high as 49 times. We believe that demonstration of the company’s strong revenue growth and improving margin outlook should allow the multiple to expand. Our price target of $6 appears conservative should the market recognize the company’s above average growth prospects. 

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Noble Capital Markets Research Reports – Friday, October 20, 2023

Companies contained in today’s report:

Bowlero (BOWL)/OUTPERFORM – Significant Cash Haul; Unrecognized Real Estate Portfolio

Bowlero (BOWL/$10.9 | Price Target: $17.5)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
Significant Cash Haul; Unrecognized Real Estate Portfolio
Rating: OUTPERFORM

Asset sale-leaseback. On October 19, the company completed the sale-leaseback of 38 bowling centers across 17 states to Vici Properties in exchange for $432.9 million. Notably, the agreement is structured as a 25 year lease with an initial annual rent of $31.6 million. In our view, the favorable transaction should allow for an acceleration of company growth initiatives and debt reduction.

Terms of the agreement. The 25 year lease will increase from the initial amount of $31.6 million by a minimum of 2% and a maximum of 2.5% annually, equating to an acquisition cap rate of 7.3%. The lease agreement stipulates the lessee pays all expenses of the property in addition to rent, and should be treated as a long-term lease, which should have no impact on EBITDA.

Significant financial leverage. The 38 bowling centers in this sale-lease back arrangement represents a relatively small portion of the company’s total 342 bowling centers. As such, we believe that there remains a significant untapped potential monetization of the company’s total real estate portfolio. 

Bolstered financial position. As of July 2, the company had $195.6 million in cash and cash equivalents and an undrawn facility of approximately $225 million.  In our view, the capital raised from the asset sale-leaseback improves the company’s positioning to pursue acquisitions, accelerate new builds and conversions and pay down debt.

Compelling valuation. Near current levels, the BOWL shares trade at 8.1 times enterprise value to our 2024 adj. EBITDA forecast. We believe that the market has not recognized the value of its real estate portfolio. Our price target of $17.50 reflects a target multiple of 12.5 times EV/2024 adj. EBITDA, more in line with our long term adj. EBITDA growth outlook of 13%. In our view, the shares offer a favorable risk reward relationship. The shares are rated Outperform.

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