LUNA Innovations: Managements Focus On Shareholder Value Is Superb

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LUNA Innovations: Managements Focus On Shareholder Value Is Superb

LUNA Innovations Inc. develops and markets fiber optic sensing, and test and measurement products worldwide. The company has two operating segments. The products and licensing unit sells the company’s commercial fiber optic test and sensing equipment and the technology development segment performs contract R&D for U.S. government agencies.

 

November 19, 2021

Price (as of close on Nov 18, 2021)

$9.38

Rating

BUY

Price Target

blocked

 

 

LUNA Innovations Inc. (LUNA)

The Company reported weak third quarter 2021 results impacted by ongoing supply chain challenges globally. The planned divestment of the slow growing, low margin LUNA Labs business is a positive. blockedblockedblockedblockedblockedblocked     

luna nov 2021

 

Q3:21 Highlights

➢ LUNA announced plans to divest their LUNA Labs business. As of the beginning of Q3, the business has been moved to discontinued operations.

➢ Q3:21 revenues were $20.3 million, up 32% versus Q3:20, largely attributable to the acquisition of OptaSense in December 2020.

LUNA reported a 31% YOY increase in gross profit to $12.5 million. Gross margin decreased by ~100 bps YOY to 62%.

➢ Adjusted EBITDA decreased to $2.1 million, compared to $3.1 million for Q3:20.

➢ LUNA noted that the Company continues to be challenged by supply chain issues which is impacting revenue growth despite strong demand.

➢ For the full year, LUNA revised its 2021 revenue outlook to factor in LUNA Labs as a discontinued operation and supply chain headwinds. Revenue and adjusted EBITDA are now expected to be between $85-$88 million and $6-$8 million, respectivel

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PRIMARY RISKS

➢ The Company operates in a space which is prone to rapid technological changes. New technology or the emergence of new industry standards could render existing products obsolete.

➢ Difficulties with integrating acquisitions could adversely affect operating costs and expected benefits from those acquisitions.

 

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Emergent BioSolutions: A Great Value Proposition Emergent BioSolutions (EBS)

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Emergent BioSolutions: A Great Value Proposition Emergent BioSolutions (EBS)

Emergent BioSolutions (EBS) is a global specialty life sciences company that develops and commercializes vaccines, drugs and devices that address public health biodefense threats. The Company is a preferred provider of biodefense products and services to the U.S. government under multi-year contracts. Its portfolio includes the only FDA-approved anthrax vaccine and smallpox vaccine and NARCAN nasal spray for treating opioid overdose. The Company’s products are sold mainly in the U.S. as well as internationally.

 

November 8, 2021

Price (as of close on November 5, 2021)

$33.11

Rating

BUY

New 12- Month Target Price

blocked

 

Emergent BioSolutions

EBS shares tumble after termination of CIADM contract. JNJ COVID vaccine and other vaccines and products remain on track. We maintain our Buy rating, . blockedblockedblockedblockedblockedblockedblocked

 

ebs nov 2021

 

Q3:21 Highlights

➢ Termination of US government contract for pandemic preparedness reduces revenues to be realized under related task orders by $180 million while accelerating recognition of $60 million of deferred revenues.

➢ This contract termination has no impact on manufacturing of the JNJ COVID vaccine, which is a commercial order. EBS resumed manufacturing of the COVID vaccine in July and has to-date produced over 100 million doses.

➢ EBS secures a COVID vaccine manufacturing contract with Providence Therapeutics valued at $90 million over five years.

➢ The company’s CDMO business secured $118 million new business during the September quarter and ended the quarter with backlog of $1.0 billion.

➢ Sales of ACAM2000 smallpox vaccine rose $79.7 million as the company commenced deliveries under a contract option valued at $182 million. Sales of NARCAN nasal spray rose 50% to $133.3 million and EBS increased full-year guidance for this product to $400-$420 million from $305-$325.million earlier.

➢ Phase III trials began of the company’s chikungunya vaccine candidate and of its COVID-HIG therapeutic candidate for outpatient treatment of those at risk of severe forms of COVID.

➢ We updated our revenue and adjusted EPS estimates to reflect September quarter results and reduced guidance. We maintain our BUY rating blockedblockedblockedblockedblockedblocked

 

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Acme United Corp: Management's Supply Chain Preparation Helping Lead Record Sales And Earnings In 2021

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Acme United Corp: Management's Supply Chain Preparation Helping Lead Record Sales And Earnings In 2021

Acme United Corporation is one of the largest worldwide suppliers of innovative cutting devices, measuring instruments and safety products for the school, home, office and industrial markets. The company has facilities in the U.S., Canada, England, Germany, Hong Kong and China.

 

November 11, 2021

Price (as of close on Nov 10, 2021)

$36.60

Rating

BUY

Price Target

blocked

 

Acme United Corp. (ACU)

ACU reported strong Q3:21 results with revenue up 11% YOY and net income up ~30% YOY. The management noted that it anticipates record sales and earnings in 2021. The supply chain challenges will continue in 2022, however ACU noted that it is well prepared given inventory stock-up over the last 18 months. We increase our target price blockedblockedblockedblocked    and maintain BUY on the stock.

 

acme nov 2021

 

Q3:21 Highlights

Q3:21 revenues were $47.9 million, up ~11% from Q3:20. The performance was strong across US (+12% YOY) and Canada (+6% YOY), while Europe was flat YOY.

Gross Margin for Q3:21 was 35.5%, which was up 100 bps compared to 34.5% in Q3:20.

Operating profit up 39.4% YOY on account of higher revenue and improved gross margins.

Net income for Q3:21 was $2.0 million vs. ~$1.5 million in Q3:20. The diluted EPS was $0.50 in Q3:21, vs. $0.46 in Q3:20, an increase of ~8.6%.

The company anticipates record sales and earnings in 2021.

We marginally adjust our earnings estimate factoring in the latest management commentary. We increase our target price to blockedblockedblockedblockedblockedblockedblockedblocked

 

PRIMARY RISKS

ACU’s results can be negatively impacted by weak economic activity; rising commodity input costs; timing of customer orders; foreign exchange fluctuations; and competitor pricing.

Failure to integrate acquisitions could adversely impact business operations.

 

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Singular Research's Private Client call with Olympic Steel (ZEUS) Wednesday 12/1 at 9am PDT

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Private Client call with Olympic Steel (ZEUS) Wednesday 12/1 at 9am PDT

 

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Join us for a private client webinar with CEO Richard Marabito and CFO Rich Manson of Olympic Steel (ZEUS) on Wednesday, December 1 at 9 am PDT.Olympic Steel is a leading U.S. metals service center focused on the direct sale and distribution of large volumes of processed carbon, coated and stainless flat-rolled sheet, coil and plate steel, aluminum, tin, pipe, and tubular products.Olympic Steel, Inc., a leading national metals service center, announced record quarterly financial results for the three months ended September 30, 2021. Net income for the third quarter totaled $44.5 million, or $3.87 per diluted share, compared with a net loss of $1.5 million, or $0.13 per diluted share, in the third quarter of 2020. The Company reported sales totaling $668 million for the third quarter of 2021, compared with $300 million in the third quarter of 2020.

After registering, you will receive a confirmation email containing information about joining the webinar.

 

GOGO Inc: Long Term Potential Upside Proven By Management's Updated Guidance

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GOGO Inc: Long Term Potential Upside Proven By Management's Updated Guidance

 

October 19, 2021

Price (as of close on October 19, 2010)

$16.70

 

Rating

BUY

 

12- Month Target Price

$20.00

 

 

Gogo Inc. (GOGO)

Based on management’s recent updated guidance, we are revising our estimates higher. We increase our target price to $20.00 per share (earlier $18.00) and maintain our Buy rating.

 

gogo oct 2021

 

 

Long-Term Financial Update

➢ Through 2025, management revised their expected compound annual growth rate of revenue to be 15% from 10% previously.

➢ Management is now targeting 2023 free cash flow to be $125 million ($100 million previously). GOGO is also forecasting free cash flow in 2025 to be $200 million.

➢ The Company also revised their adjusted EBITDA margins from 35-40% to 40-45% which matches our original investment thesis.

➢ By 2025, management assumes only 47% of North American business aircraft will be connected with in-flight connectivity, still representing a large unsaturated market.

➢ GOGO’s AVANCE platform combined with their OEM manufacturer relationships are the key to their success in that GOGO provides a superior product with superior customer experience.

➢ We increase our estimates based on management’s long-term financial update and their commentary. We maintain our Buy rating and increase our target price to $20.00, implying a price appreciation potential of 20%.

 

RISKS

➢ Potential entry from SmartSky (their closest competitor) could cause GOGO to spend more on customer acquisitions or force GOGO into a price war.

➢ Low Earth Orbit (LEO) satellite companies may have lower than expected margins in a partnership with GOGO, may not partner with GOGO or may take customers from GOGO.

 

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Armada Hoffler Properties: Strong Industry Dynamics Coupled With Strong Management Indicate Upside Potential

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Armada Hoffler Properties: Strong Industry Dynamics Coupled With Strong Management Indicate Upside Potential 

 

October 15, 2021

Price (as of close on Oct 14, 2021)

$13.70

 

Rating

BUY

 

12- Month Target Price

blocked

 

Armada Hoffler Properties Inc. (AHH)

Armada Hoffler Properties is repositioning its portfolio for growth and represents an opportunistic way to play a reopening trade. AHH’s diversified portfolio with high occupancy rates, coupled with strong industry dynamics and a healthy development pipeline, should result in a growing NAV and stock price. In addition, AHH’s dividend yield of 4.7% is attractive. We initiate with a BUY rating and a blocked price target.

ahh oct 2021

 

Investment Thesis

Armada Hoffler Properties is a self-managed REIT with four decades of experience in developing, acquiring, and managing high-quality office, retail, and multi-family properties.

The stabilized property occupancy rate for AHH was 94.1% as of Q2:21, which reflects AHH’s high-quality portfolio.

We are encouraged by a strong development pipeline which should support NOI growth. AHH expects its portfolio NOI to climb by over 40% from 2020 levels when current development projects are fully stabilized.

A diversified portfolio with high occupancy rates, coupled with strong industry dynamics and a healthy development pipeline, should result in a growing Net Asset Value (NAV) and stock price. In addition, the dividend yield of 4.7% is attractive.

The Company is poised to grow its earnings over the near to medium term. We initiate coverage with a BUY rating and a price target of blocked.

 

PRIMARY RISKS

The Company is dependent on timely completion of its development projects. Failure to remain on schedule can lead to cost overruns, which can impact profitability.

The Company is dependent on external capital to fund its asset purchase. There is risk of dilution from any future equity offerings.

 

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Esports Entertainment: Mispriced And Misunderstood Future By The Market Equates To Potential Upside

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Esports Entertainment: Mispriced And Misunderstood Future By The Market Equates To Potential Upside

 

October 21, 2021

Price (as of close on October 20, 2021)

$6.28

 

Rating

BUY

 

12- Month Target Price

blocked

 

 

Esports Entertainment (GMBL)

Esports Entertainment delivers 63% sequential revenue growth during Q4:21 and guides for FY:22 revenues exceeding $100 million. We reiterate our Buy rating and  blocked price target. 

gmbl oct 2021

 

FY:21 Highlights

 ➢GMBL operating esports gaming platforms, event venues and owns proprietary esports infrastructure and technology. The eSports gaming market is valued at $750 million and projected to grow to $3 billion over the next five years.   

➢ Q4:21 revenues improve 63% sequentially to $8.8 million and GMBL delivers full-year revenues of $16.8 million via a combination of acquisitions and organic growth.     

➢ GMBL closed the acquisition of Bethard during the June quarter, which gives the company gaming licenses in Sweden and Spain and adds roughly $30 million to annualized revenues. Over the past 12 months the company has closed six significant acquisitions, including Bethard, Lucky Dino, ggCircuit, Helix, FLIP, EGL and Argyll.       

➢ The company has opened and is staffing a New Jersey license in anticipation of securing its New Jersey gaming license. Ohio is the next state where GMBL plans to apply for a license and several additional states are targeted for 2022 as well as the Canadian province of Ontario. 

GMBL is guiding for Q1:22 revenues ranging from $16-$16.5 million and FY:22 revenues exceeding $100 million. We reiterate our Buy rating and blockedblockedblockedblockedblockedblockedblockedblockedblocked

 

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Singular Research's Private Client Webinar 10/27 at 9am PDT

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Wednesday, October 27 at 9 am PDT

 

REGISTER NOW

Join us for a private client webinar with CEO Kevin Mills of Socket Mobile, Inc. (SCKT) on Wednesday, October 27 at 9 am PDT. There will be a chance for 1 on 1s with Kevin Mills from 10 am to 12 pm PDT. 

Socket Mobile is a leading provider of mobile data capture solutions. Its products include stand- alone barcode scanners, attachable barcode scanners, and RFID/NFC readers/writers. The primary end markets for its solutions are retail, commercial services, logistics, and healthcare. The Company announced strong Q2:21 results, delivering its fifth consecutive quarter of operating profitability. Revenue rose 119% YOY. Management expects growth to remain strong in the near term led by retail as the economy re-opens. We increase our target price to $9.50 per share (earlier $7.75) and maintain our rating at Buy.