IRIDEX (IRIX:BUY) FY:16 revenues rise 10.5% to $46.2 million, fueled by three-fold increase in Cyclo G6 laser platform sales.

16-MAR-17 – IRIDEX (IRIX:BUY) FY:16 revenues rise 10.5% to $46.2 million, fueled by three-fold increase in Cyclo G6 laser platform sales. Investments in infrastructure and the sales force resulted in a FY:16 operating loss. However, we think continued rapid growth in the G6 platform will leverage recurring revenues from disposable probes to expand margins and EPS over the next 12-18 months. We maintain our BUY rating and $16 target.

Q4:16 Highlights

  • IRIX sold 96 Cyclo G6 lasers in Q4:16, bringing total unit sales for the year to 384 systems. The Company easily exceeded its 200 unit target. Since launching the G6 system in March 2015, the installed base has grown to 497 units.
  • The Cyclo G6 system is based on a razor/razor blade model, with each installed laser consuming 10-12 disposable probes per month. IRIX shipped 8,000 probes in Q4:16 and 27,000 probes during the year. Probes have attractive 80% gross margins and should fuel rapid progress towards profits.
  • IRIX increased its US sales organization to 17 direct sales reps, established direct sales in Germany, commercially launched a third G6 probe (the G-Probe Illuminate) and conducted a live surgery webcast at the Asia-Pacific Academy of Ophthalmology annual meeting. Increased infrastructure investment is expected to result in a FY:17 operating loss, but position IRIX for higher sustainable long-term growth.
  • The Company resolved Issues with medical retina products that negatively impacted Q3:16 sales and worked through its retinal product backlog in Q4:16.
  • IRIX raised $14.8 million through an equity offering and ended FY:16 with $23.7 million of cash and equivalents. The Company also has access to a $15 million revolving credit facility.
  • We reiterate our BUY rating and $16 price target.

February 2017 Earnings Scorecard


February 2017
SymbolRatingTargetMonth Return


February 2017
SymbolRatingTargetMonth Return

Singular Research Director’s Letter : March 2017

A Theme Based Market Advance

As the market attempts to gauge the winners and losers based on policy changes from the new US administration, there have been pockets of euphoric market moves, primarily in larger cap names. The aggressive agenda of the new administration leads to good headline material, but the slow grind-it-out process of enacting new legislation may cause some of the recent gains to be suspect in the months ahead. The US equity market is generally positive on the pro-business stance in Washington, however, some of the main themes may play out with fits and starts. That being said, there will be investment opportunities in many companies that may benefit from higher infrastructure spending, lower taxes, lower regulations, a changing healthcare landscape, and higher military spending. Some of these headline themes may take more time to develop. Overall, we remain bullish on the prospects for the small cap arena.

For the top performing companies in February on the Singular Research coverage list, a common theme is current and anticipated strong revenue growth. Salem Broadcasting (SALM) was the strongest performer in February. The company operates radio, print and internet properties targeting a conservative-minded audience, and the stock has been on a steady rise after early November lows. Kulicke & Soffa designs and semiconductor, LED, and electronic assembly equipment. Much stronger than expected equipment sales drove the better than expected quarter. Gray Television Networks (GTN) owns television stations and digital assets in many US markets. GTN has been reporting strong revenue growth and the stock has been on a rebound since the November lows. Iridex (IRIX) manufactures laser-based medical equipment and supplies for the ophthalmology market. New products are driving revenues. Stealthgass (GASS) provides seaborne transportation for LPG. GASS has responded from its lows and the company reported an uptick in contract rates for its vessels. There are very few industry builds coming online in the next two years which will likely lead to higher dayrates.

The worst performing group of the Singular coverage list during February have several hidden gems that we anticipate will perform well in the next year. The worst performing stock of the coverage list, Aceto (ACET), has been correcting for a few months, but our analyst perceives strong EPS growth in the next 18 months.  VASCO Data Security (VDSI) is transitioning to be a software company, and outperformed recently reduced expectations. . (CTRP) was down as a short. The stock has moved up to the top of the trading range, and we expect weak performance (positive as a short). NV 5 Global (NVEE) provides technical engineering and consulting for infrastructure and construction markets. The stock has been digesting recent strong gains and our analyst expects a very strong 2017. ClearOne (CLRO) provides audio/video conferencing tools for Fortune 500 companies. The company has developed new products that are expected to drive growth in 2017.

We initiated coverage on two new companies in February. General Finance (GFN) with a BUY rating. GFN is a specialty rental services company with portable storage, modular space and liquid containment solutions. The Asian fleet, primarily in Australia, has a very high utilization rate while the utilization rate in the US fleet has declined due to the slump in the oil & gas industry. Our analyst expects improvements in the US from general economic growth and any uptick in oil & gas will drive EPS growth. We initiated coverage on New York Times (NYT) with a SELL rating. NYT publishes the New York Times and has had challenges in the digital market where others dominate. Ad spending with newspapers continues to decline, and NYT is saddled with high unfunded pension costs.

We continue to work on new ideas and plan to launch coverage in the coming weeks on one or several new names. At Singular Research, we continue to seek out investment ideas that have minimal to no Wall Street coverage. We thank our clients for your support of independent equity research.

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Singular Research Director’s Letter : February 2017

A New Year Brings Consolidation

The post-election rally took a breather in January, and in the process the large cap stocks outperformed. Does this foretell what we can expect for the year? Will the January effect work again in 2017? We anticipate an up year for the equity markets in 2017, but we expect the nature of it will likely favor small cap names which is different from what occurred in January. After a strong Q4 performance it is normal for small cap names to trail during consolidation phases. We anticipate any fiscal stimulus from lower taxes or infrastructure building will support domestic companies which typically means small caps.

For the companies on the Singular Research coverage list, most of the top performing group in January have strong fundamental outlooks. NV 5 Global (NVEE) was the strongest performer in January after digesting earlier gains in December. NVEE provides technical engineering and consulting for infrastructure and construction markets. Our analyst expect a very strong 2017. Seabridge Gold (SA) released two very favorable reports critical to mineral development. Both the Preliminary Feasibility Study and a Preliminary Economics Assessment demonstrated improved project economics on its mining assets.  Supreme Industries (STS) manufactures specialty commercial vehicles has been performing well after the October low. Our analyst indicates the company is well positioned to outpace its industry. Stealthgass (GASS) provides seaborne transportation for LPG. GASS has responded from its lows and the company reported an uptick in contract rates for its vessels. There are very few industry builds coming online in the next two years which will likely lead to higher dayrates. Nova Measuring Instruments (NVMI) develops and markets process control metrology equipment used in the manufacture of high end integrated circuits. The company expects the strong demand from foundries to continue.

The worst performing group of the Singular coverage list during January have several hidden gems that we anticipate will perform well in the next year. The worst performing stock of the coverage list, Amyris (AMRS) was a new initiation for Singular in September, and the stock performed exceptionally well in September – October. The company has several products in the pipeline with favorable long-term implications and our analyst remains very bullish on AMRS. Century Casinos (CNTY) has been performing well in the last few months and our analyst forecasts strong EPS growth in 2017. Aceto (ACET) has been correcting for a few months, but our analyst perceives strong EPS growth in the next 18 months. Trecora Resources (TREC) performed poorly driven by weakness in the mining operations. Our analyst perceives strong operating fundamentals in the petroleum business. (CTRP) was down as a short. The stock has been in a trading range in the past year, and we expect the breakout out of this range to be to the downside.

We are currently working on several new ideas and plan to launch coverage in the coming weeks on one or several new names. At Singular Research, we continue to seek out investment ideas that have minimal to no Wall Street coverage. We thank our clients for your support of independent equity research.

Singular Research Top Ideas for Performance 2017

Amyris (AMRS) current price $ 0.62  PT $2.80 :  has a proprietary bioscience platform that cost effectively converts plant sugars into hydrocarbon molecules and specialty ingredients used to replace expensive or difficult-to source materials in fragrance, cosmetics, healthcare, nutrition and industrial applications. AMRS partners with industry leaders to monetize its technology through development collaborations and long-term supply agreements with profit-sharing. Q3:16 revenues tripled to $26.5 million as a result of new collaborations and product sales ramping up under long-term supply agreements. At maturity, AMRS’s existing collaboration portfolio and pipeline could generate revenues exceeding $2 billion annually. During 2016 AMRS has transformed from a loss-producing biofuels business to a growing industrial biotechnology company partnering with established players in the health, nutrition, personal care and industrial markets. The Company develops new farnesene molecules for these partners, who in return provide AMRS with R&D funding, milestone payments, the potential for revenues from long-term supply agreements and profit-sharing on the partner’s downstream sales. At present, AMRS has 14 active revenue-generating collaborations covering the development of over 100 new molecules and another dozen collaboration agreements in various stages of advanced discussion.

Anika Therapeutics (ANIK) current price  $ 50.68 PT $60: Anika develops and manufactures therapeutic products for tissue protection utilizing hyaluronic acid (HA), a naturally occurring polymer in humans. Products address osteoarthritis, advanced wound care, and surgical issues. Anika HA products are unique from several perspectives.  Anika reported strong margins in Q3, which drove the EPS beat. Revenues of $25.8 million were slightly below our expectations, but gross margin of 80.6% was well above our estimate of 74%. EPS of $0.59 was above our estimate of $0.49. Revenue growth in 2016 has been impacted by inventory adjustments taken in 2015 by DePuy Mitek, the US distributor. Sales to end customers remains strong. Ø Anika has a solid growth path ahead from both current products and the product pipeline. Monovisc continues to gain market share despite premium pricing. Product performance has quickly driven Monovisc to hold the #2 position in the single injection viscosupplement market for knees in the US, after initial launch in 1H:2014. Prices are likely to decline, particularly to gain new large customers. YTD Monovisc sales are up 33%, while end user volume is up about 80% – channel inventory adjustments account for the difference. Price declines have only been in the 5 – 8% range. Ø Cingal was launched in Europe and Canada in late Q2:16, and Anika reports it has already contributed $0.5 – 1 million of revenues, or approximately 2 – 4% of total Orthobiologic revenues in Q3. Ø We anticipate a US launch for Cingal in late 2018 to early 2019.

Aceto Corporation (ACET) current price $19.85  PT $29. ACET is a global leader in marketing and distribution of pharmaceutical intermediates and active ingredients; finished dosage form generics; nutraceutical products; agricultural protection products and specialty chemicals. With operations in ten countries, it distributes more than 1,100 chemical compounds used as finished products or raw materials. Although the company is navigating through near term headwinds in the form of product launch delays and backorders related to Rising Pharmaceuticals (Rising) that will weigh on 1H:17 results, we expect management’s plan to launch 12 to 15 new generic products during this fiscal year and the completion of the recently announced acquisition of generic products and related assets of Citron Pharma in 2H:17 would drive ACET earnings going forward. Management expects to launch 15 – 20 of Citron’s 31 approved but-not-yet launched products in the second half of fiscal 2017 – a six month period. The entire 31 approved but-not-yet launched products and their associated revenue potential is embedded in the 8.3x EBITDA purchase price. Importantly, this acquisition advances the company’s transition to a Human Health segment driven focus, with the deal increasing Human Health segment sales by more than three-quarters of a pro forma full year basis. Separately, Aceto is standing by its assertion it can bring to market 12 to 15 new products on its own, apart from Citron. Aceto launched three new products in Q1:17, and has announced two launches so far in Q2:17 (generic Erythromycin gel for acne and generic Oxybutinin). Management guided that its launches will be back end loaded to the second half of fiscal 2017. So we figure another 7 to 12 launches will come in Q3 and Q4. Management expects the acquisition to be accretive to non-GAAP EPS at closing and accretive to GAAP earnings in 12 months.


  Banco Latinoamericano (BLX) current price 27.96  PT $35.60   Banco LatinoAmericano de Exportaciones (“Bladex”) is a Latin American supranational bank. Core banking activities include trade finance operations such as bankers’ acceptances, letters of credit, and receivables factoring. Within its Treasury division, the bank buys and sells regional fixed income securities for its own investment book. The bank also operates an asset management business (Bladex Asset Management “BAM”), which runs a hedge fund focused on regional fixed income securities, currencies, and regional indices. management expressed positive outlook for the company’s business prospects in FY:17, considering Latin America’s economic growth and trade flows. In the trade flows segment, the WTO anticipates the Latin American countries exports to climb 4.4% in 2016, up from the earlier projection of 1.9% for the year. The international trade regulator also expects Latin America trade flows (imports + exports) to grow ~7% in 2017. With the trade finance (shortterm and low risk in nature) representing 61% of the BLX total commercial loan book, we expect the above mentioned favorable projections of Latin America’s trade flows to drive demand for the company’s traditional business (trade finance) and result in earnings growth growing forward.

  • Daktronics Inc.(DAKT) current price $10.40   PT $14    Daktronics, Inc. is the world’s leading supplier of electronic scoreboards, large electronic display systems, and digital messaging solutions for use in sports, transportation, and communications. The company is a market leader in electronic digital display systems and products which are rapidly becoming more prevalent in various eclectic outdoor and indoor venues as an important source of revenue generation and event augmentation. As this trend continues, the company should continue to experience superior top line and bottom line growth.  The improving political climate for increased infrastructure spending should prove to be a boon to Daktronics key verticals in transportations systems and Highway digital display products.  An improving domestic economy will provide better budgets for public venues such as high schools, colleges and community centers to upgrade or initiate digital display systems as a new additional source of revenue. The Company’s products are used to display static images which change at regular intervals. Daktronics is a proven technological innovator with systems that include many features unique to the outdoor advertising market, that will drive a strong upgrade cycle.

StealthGas, Inc. (GASS) current price $4.13 PT $6  StealthGas provides seaborne transportation services for LPG producers and users worldwide. Various petroleum products include butane, butadiene, isopropane, propylene, and refined petroleum products. The company operates a fleet of 49 LPG vessels, three medium range product tankers and one Aframax oil tanker. The small vessel LPG market served by StealthGas is far more stable than the large vessel market. GASS has four new vessels on schedule for delivery in 2017, and 80% of the funding for these vessels is committed, with the remaining $21.5 million easily addressed with cash. Charter rates have been bouncing along bottom and the fact that they don’t decline further during the seasonally weak summer months indicates a confirmation of the bottoming process, in our opinion. The pricing cycle continues to bounce along bottom, but there are signs this will improve in the coming months. Oil and gas prices have reached an area of stabilization, even if vacillating within a price range, after a long price decline. In the market where StealthGas is focused, the small LPG deliveries in coastal areas, there has been increasing ship scrapping in the industry. Approximately 24% of the industry fleet is over 20 years old – older vessels are far less efficient to operate. A low pricing environment is driving older vessels to the scrapyard. Finally, the small to medium vessel LPG industry has a small orderbook for new builds. We lower our EPS estimates for 2016 and 2017 due to the lengthening of this weak pricing environment. We anticipate a slight improvement in pricing during 2017. The younger fleet, new builds to be added to the fleet in 2017, and normal drydock expenses drives the beginning of the earnings rebound in 2017.We anticipate StealthGas has earnings power of $2.00 – $2.25 per share in the upcoming cycle. StealthGas is priced at 24% of book value.


Black Hills Corporation (BKH) price $62.15  PT $68  Black Hills Corp is a vertically-integrated energy company. It operates in utilities group comprised of regulated electric utilities & regulated gas utilities, and non-regulated energy group comprised of power generation, coal mining and oil and gas. BKH relies on rate-base generation assets offering the advantage of more stable, less expensive customer rates. The generating assets are included in the utility rate base and reviewed and approved by government authorities. BKH is submitting applications in 2017 seeking approval for Cost of Service Gas Program designed to provide natural gas price stability for utility customers, while providing increased earnings opportunities for shareholders. BKH is transitioning the oil and gas business toward supporting the Cost of Service Gas Program, while maintaining the upside value optionality of the Piceance Basin.The acquisition of SourceGas, and smaller utility systems in Kansas, Iowa and Wyoming over the past several years easily integrates into operations because of a scalable platform which adds to shareholder value.

 JMP Group, Inc. (JMP) price $6.12  PT $7.50  JMP Group is a diversified financial services company. The company’s main lines of business consist of a broker-dealer and investment bank focused on the middle market, and asset management subsidiaries focused on alternative investment strategies and a corporate credit manager. Capital markets activities have started to recover, and although nowhere close to peak levels, they are up significantly from both the prior quarter (Q2:16) and the prior year (Q3:15). With M&A advisory fees continuing to grow, total investment banking revenue is up just less than 80% from Q2:16 and up 26.3% from Q3:15. Our outlook for the balance of FY:16 anticipates an uptick in capital market activities through the remainder of the year, although we believe that this will be less robust than initially anticipated and are planning to adjust our outlook in a subsequent report. While the investment banking side of the business has been in a cyclical downturn, JMP Group’s earnings have been propped up by its diversified lines of business such as asset management as well as through investment income and principal transactions. In Q3:16, JMP benefited from an improved pricing environment for corporate loans, which benefited EPS. Just after the quarter closed, they announced an accretive transaction in a real estate fund in which they are involved that will result in a one-time gain in Q4:16, as well as ongoing management fees.


Seabridge Gold Inc. (SA) price $9.60 PT $17  Seabridge Gold (SA) is a development stage company engaged in the acquisition and exploration of gold properties located in North America. SA is designed to provide shareholders with exceptional leverage to a rising gold price. The company’s business plan is to increase its gold ounces in the ground but not to go into production on its own. SA
intends to either sell projects or participate in joint ventures towards production with major mining companies. During the quarter, Seabridge released an updated Preliminary Feasibility Study (PFS) and Preliminary Economic Assessment (PEA), which both showed improved project economics for potential joint venture partners or acquirers. Ø Subsequent to the updated studies, the company also released drilling results that show both a possible significant extension to the Iron Cap Lower Zone Deposit, and a new high grade zone that was not previously discovered. While not much is known about the size of this new deposit, the grades shown in the initial sample were significantly higher than the rest of the KSM project. Ø The company has also identified a significant target at the recently acquired Iskut project, and drilling is scheduled for 2017.

Trecora Resources (TREC) price $13.05  PT $18 The company is a leading producer of specialty chemical products used in the manufacture of expandable polystyrene, polyethylene and other plastics. The company also owns a 41% interest in a Saudi joint stock company which is scheduled to put into production in late 2018 or early 2019 a base and precious metals deposit located in southwestern Saudi Arabia. we are revising upwards our EPS forecasts for FY:18 and FY:19 as major projects at SHR (D Train and Advanced Reformer) and TC (Distillation and B-plant) are expected to come online in FY:18, which will drive revenues along with meaningful improvements in gross margins. Although the management is guiding a massive ~$30 million annual EBITDA additions over 2018-2020, we have forecast conservative EBITDA increases of ~$20 million in FY:18 and ~$8.0 million in FY:19. Consequently, we remain positive on the long term story of TREC and retain our last price target of $18.00 per share, which is an equally-weighted blended valuation of sum-of-the-parts ($17.50) and DCF ($18.47). TREC currently trades at 15.2x our 2016 pro forma petrochemicals earnings estimate of $0.79 per share and 12.5x our 2017 pro forma earnings estimate of $0.97 per share, and EV/EBITDA of 8.0x for 2016 and 6.8x for 2017. Our sum-of-the-parts approach values TREC at $17.50 per share (Petrochemical assets at $13.76 per share + mining assets at $3.74 per share) versus the current price of $13.35 per share, while a DCF approach values the company at $18.47 per share. An average of the two approaches produces a target price of $17.98 per share, which we round to $18.00 per share. With petrochemical earnings forecast to improve in 2017 and beyond based on better margins, and what we believe will be relatively stable AMAK pretax operating earnings contribution after 2017, we continue to believe TREC’s future remains bright and the valuation is attractive.

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Singular Research All Time Best Performers

Singular Research All Time Best Performers

Presenting Companies at Singular Research Sept. 22, 2016 Conference

Singular EPS Reports Beats & Raises Q4 2016


ticker reported revs estimated rev reported eps estimated eps guidance
ACET 125.6 138.7 0.24 0.28 .47 v .52
ACU 26.4 24.7 0.15 0.16 .17 v.18
AMRK 2,126 1,636 0.39 0.18 .25e vs.23
AMRS 32.2 39.5 -0.09 -0.04
ANIK 28.7 28.4 0.52 0.53 1.99 v 2.24
ARTX 28.5 0.06
BIOL 13.8 14.5 (.07)/(.05) -0.04 51.5
BKH 463.8 260.6 1.07 0.99 3.45-3.65
BLX 37.7 40.3 0.34 0.75 2.80 vs 3.20
CLRO 13.7 0.21
CNTY 36.3 36.7 0.11 0.12
CTRP 745.4 0.01
DAKT 170 170 0.2 0.2 (.12) vs (0.02)
EBS 151.7 125.5 0.74 0.61 1.57 vs. 1.60
GDDY 0.05 485
GFN 72.3 73 -0.15 -0.09 237.6
GTN 237.6 228 0.49 0.5
HBIO 26.4 27.1 0.04 0.04
IGXT 1.63 0
INTL 0.34 0.62 185.5 164.8 .90 vs .79
IRIX 12.5 12.6 -1.04 0.03
JMP 36 31.1 0.13 .0.09 .10 v 16e .45 v .69
KLIC 149.6 140 0.22 0.1 1.26 v 0.94
LABL 210.7 210 0.7 0.78 .87 v .96
LAKE 24.2 0.2
NEWT 0.47
NVEE 0.41 0.47 64.2 63.5 eps 2017 1.93- 2.05, revs 302-316
NYT 439.7 450.9 0.24 0.3
REX 109.9 1.08
SA -0.04
SALM 70.7 69.2 0.11 0.13 65m v67.4
SNC 60.1 52.4 0.33 0.32 1.17v 1.18
STMP 105.9 94.6 2.73 2.57 6-7.00
STS 61.9 56 0.12 0.15 1.22 v 1.16
TREC 54.2 59.5 0.07 0.06 0.94
VDSI 47.6 42.8 0.16 0.08 .028 vs .45
WIRE 0.55 0.67 239.3 270.9 2.79 vs. 3.15
GASS 37.5 37.4 0.04 0.06 0.28 vs 0.45

Singular Research Buyouts

Singular Research Buyouts 2016 2017