Digital Ally (NASDAQ: DGLY), which develops, manufactures, and markets advanced video-surveillance products for law enforcement, homeland security, and commercial applications, on Monday, June 4, 2018 announced a major victory in its legal battles against Axon Enterprise (NASDAQ: AXXN), formerly known as Taser International.
Why It Matters: Over two years ago and before releasing its Axon Signal product, Axon began its campaign to try to invalidate Digital Ally’s patents. The Axon Signal product contains the technology at the heart of Digital Ally’s patents and of the patent infringement lawsuit Digital Ally filed against Axon. Its first attempt, an ex parte reexamination, failed. Axon then filed four separate IPR challenges against Digital Ally’s patent Nos. 8,781,292 (the “’292 Patent”) and 9,253,452 (the “’452 Patent”). The Patent Office rejected both petitions against the ’452 Patent and one of the petitions against the ’292 Patent. Further, on June 1, Axon lost again on the last IPR challenging the ’292 Patent. In that decision the Patent Office disagreed with every argument of Axon, found all challenged claims of the ’292 Patent valid, and noted that Axon “has not demonstrated by a preponderance of the evidence that the challenged claims are unpatentable.”
Key Quote: "We are excited for the Court to begin to move both cases towards trial where a jury can finally end Axon’s and WatchGuard’s infringement and assess damages due to Digital Ally." – Stan Ross, CEO
What’s Next: While the continued positive developments in its patent litigation set DGLY up for a potential windfall profit in damages, the company has much more to offer investors. Beyond its growing reach into law enforcement, the company has generated quite a bit of success in its commercial business, including deals with NASCAR and rideshare operator zTrip. Learn more about DGLY by reading our latest coverage.
(Digital Ally, Inc. [NASDAQ: DGLY] is a client of RedChip Companies, Inc. DGLY agreed to pay RedChip Companies, Inc., a monthly cash fee for four (4) months of RedChip investor awareness services.)
Eisai Co., Ltd. (OTC Pink: ESALF) and Biogen Inc. (NASDAQ: BIIB) announced that elenbecestat was generally safe and well-tolerated in a Phase 2 clinical study (Study 202) of the oral BACE (beta amyloid cleaving enzyme) inhibitor elenbecestat (development code: E2609) conducted in the United States, and the results demonstrated a statistically significant difference in amyloid beta (Aβ) levels in the brain measured by amyloid-PET (positron emission tomography). A numerical slowing of decline in functional clinical scales of a potentially clinically important difference was also observed, although this effect was not statistically significant
The backstory: Biogen discovers, develops, and delivers worldwide innovative therapies for people living with serious neurological and neurodegenerative diseases. One of the world's first global biotechnology companies, Biogen was founded in 1978 by Charles Weissmann, Heinz Schaller, Kenneth Murray, and Nobel Prize winners Walter Gilbert and Phillip Sharp, and today has the leading portfolio of medicines to treat multiple sclerosis; has introduced the first and only approved treatment for spinal muscular atrophy; and is focused on advancing neuroscience research programs in Alzheimer's disease and dementia, neuroimmunology, movement disorders, neuromuscular disorders, pain, ophthalmology, neuropsychiatry and acute neurology. Biogen also manufactures and commercializes biosimilars of advanced biologics.
Pullback in Virtu Financial (NASDAQ: VIRT) Presents Buying Opportunity
Virtu, a technology-enabled global market maker, has rocketed from small-cap to mid-cap status this year as it moves its lead forward in the cutthroat market-making business.
After hitting a high of nearly $38 in April, the stock has pulled back to just over $30, presenting a great opportunity for new investors to enter the stock and for current shareholders to add to their position.
Jefferies initiated coverage of VIRT in May with a buy rating and a $37 price target. We think longer-term, the dividend-paying growth stock could see even higher prices.
If you’ve looked at a Level 2 screen for pretty much any stock in nearly any market, you’ll see VIRT making a market. It’s estimated they trade more than 12,000 securities in 36 different countries every day, with more than 4.5 million daily trades on average.
And they are great at what they do.
According to a recent interview with Doug Cifu, co-founder and CEO of Virtu, the market maker had only one losing day over the previous three-year period.
That success can be seen in their numbers, with net income in the first quarter topping $410 million, and earnings per share of $1.89.
“Our continued successful integration enabled this quarter’s outstanding performance in this favorable environment. The first quarter of 2018 saw the return of volume and volatility. Average realized volatility of 19.8 for the quarter was at a multi-year high. Our profitability and margins this quarter demonstrate the earnings power and competitive advantage of having a scaled and unified firm. As our integration progresses, we see opportunity for continued superior performance,” said Douglas Cifu, CEO of Virtu Financial.
Regeneron Pharmaceuticals, Inc. (NASDAQ: REGN) and Zoetis Inc. (NYSE: ZTS) announced a five-year collaboration to research the use of Regeneron's monoclonal antibody therapeutics in animals and discover new veterinary treatments.
Key quote: “Regeneron’s VelociSuite® drug-discovery and -development platforms have produced many important new medicines for people with serious medical conditions.” --Drew Murphy, Ph.D., Senior Vice President of Research at Regeneron
The backstory: Regeneron is a leading biotechnology company that invents life-transforming medicines for people with serious diseases. Founded and led by physician-scientists for 30 years, our unique ability to repeatedly and consistently translate science into medicine has led to six FDA-approved treatments and over a dozen product candidates, all of which were home-grown in our laboratories. Our medicines and pipeline are designed to help patients with eye disease, heart disease, allergic and inflammatory diseases, pain, cancer, infectious diseases, and rare diseases.
Regeneron is accelerating and improving the traditional drug-development process through its proprietary VelociSuite® technologies, including VelocImmune® to yield optimized fully human antibodies, and ambitious initiatives such as the Regeneron Genetics Center, one of the largest genetics-sequencing efforts in the world.
Rocky Brands, Inc. (NASDAQ: RCKY) announced that the Company will make a presentation at the Baird 2018 Global Consumer, Technology & Services Conference at the InterContinental New York Barclay Hotel. The presentation is scheduled for Wednesday, June 6, 2018 at 3:45 p.m. Eastern. The presentation will be simultaneously broadcast on the Internet and will be available at http://www.rockybrands.com/.
The backstory: Rocky Brands, Inc. is a leading designer, manufacturer and marketer of premium quality footwear and apparel marketed under a portfolio of well-recognized brand names, including Rocky®, Georgia Boot®, Durango®, Lehigh®, and the licensed brand Michelin®.
Talos Energy Inc. (NYSE: TALO) on May 29, 2018 provided details of the Company's strategy, its key assets, and 2018 financial and operating guidance. It also provided an initial outlook for 2019 and an operations update. A presentation containing additional information can be found on the Company's website at www.talosenergy.com in the Investor Relations section.
The backstory: The Company expects that it will generate positive free cash flow after debt service in 2018 – on a pro forma basis – and also in 2019, while investing in the development of its high-quality U.S. Gulf of Mexico assets, appraise the Zama discovery offshore Mexico and continue its high-impact exploration programs both in the United States and Mexico.
Talos is a technically driven independent exploration and production company with operations in the United States Gulf of Mexico and in the shallow waters off the coast of Mexico. Our focus in the United States Gulf of Mexico is the exploration, acquisition, exploitation and development of shallow and deepwater assets near existing infrastructure. The shallow waters off the coast of Mexico provide us high impact exploration opportunities in an emerging basin. The Company's website is located at www.talosenergy.com.
Key quote: “We are pleased to present our Financial and Operational guidance, including a detailed view on the company and its strategy, which outlines Talos’ high-quality portfolio on both sides of the Gulf of Mexico, and value proposition as the largest pure-play public company in the basin. Our guidance reflects a strong free cash flow generating business, with our capital program being internally financed, while effectively managing our liquidity and maintaining balance sheet flexibility. We believe this flexibility will allow us to be a natural consolidator in the basin.” -- Timothy S. Duncan, President and Chief Executive Officer
PetIQ, Inc. (NASDAQ: PETQ) to Participate in the Jefferies 2018 Consumer Conference
PetIQ, Inc. (NASDAQ: PETQ), a leading pet medication and wellness company, today announced that management will participate in the Jefferies 2018 Consumer Conference in Nantucket, MA. The presentation will be on Wednesday, June 20, 2018 at 10:00 a.m. ET and can be accessed live over the Internet hosted at the “Investors” section of the Company's website at www.PetIQ.com. The presentation will be archived online through Tuesday, September 18, 2018.
The backstory: PetIQ is a leading, rapidly growing pet health and wellness company. Through over 40,000 points of distribution across retail and e-commerce channels, PetIQ and VIP Petcare, a wholly-owned subsidiary, have a mission to make pet lives better by educating pet parents on the importance of offering regular, convenient access and affordable choices for pet preventive and wellness veterinary products and services. PetIQ believes that pets are an important part of the family and deserve the best products and care we can give them. For more information, visit www.PetIQ.com.
Spectrum Global Solutions (OTC: SGSI), a single-source provider of end-to-end, next-generation wireless and wireline network solutions to the service provider (carrier) and corporate enterprise markets, last week received over $750,000 in new purchase orders and approval for use of new patented drone technology.
Why It Matters: SGSI is building an impressive backlog of new business, much of which gets booked as revenue in the coming months and quarters, which has given management great visibility into the overall potential for the year. With the favorable industry trends driving business demand, we don’t expect to see a change in the pace of new business wins the company has been announcing in recent months. This could lead to even further revenue growth not just in 2018, but beyond.
Key Quote: “We continue to see an increase in our revenue and backlog as we enter into the second half of the 2018 calendar year. We are continuing to track at a $30 Million plus annual run rate.” – Roger Ponder, CEO
What’s Next: SGSI’s market cap is only $1.6 million. The company is expected to generate upwards of $30 million in revenue in 2018. Even at a conservative valuation of 1x sales, the stock could still see gains of several hundred percent in the near-term. Add in the potential for further growth from acquisitions, and owning shares at current levels could be one of the best bargains of the year.
(Spectrum Global Solutions [OTC: SGSI] is a client of RedChip Companies, Inc. SGSI agreed to pay RedChip Companies, Inc. a monthly cash fee for six (6) months of RedChip investor awareness services.)
Esports Entertainment (OTCQB: GMBL), a licensed online gambling company with a specific focus on esports wagering and 18+ gaming, announced the appointment of Geoff Bough as Strategic Advisor. Mr. Bough is a well-known expert with an extensive background in online gaming and both the esports and sports worlds.
Why It Matters: Mr. Bough’s history in the gambling and gaming industries should have an immediate impact on GMBL. Since May 2017, Mr. Bough has been Vice President of Marketing and Partnerships at DRAFT, a subsidiary of Paddy Power Betfair plc. Previously, from 2010 to 2016, Mr. Bough was Head of Business Development for FanDuel, Inc. Mr. Bough also serves as an advisor to FanAI, an artificial intelligence esports audience monetization platform based out of Santa Monica, CA and he has done consulting work for several major esports-focused companies, including Activision Blizzard.
Key Quote: “We are excited Geoff has joined our team. The timing of his appointment could not be better, given the recent Supreme Court decision regarding online gambling in the United States. His insights and connections into the American esports wagering market will be of significant value to the Company now that the U.S. market has opened up.” – Grant Johnson, CEO
What’s Next: With the combination of the huge growth in esports and the recent fall of the Professional and Amateur Sports Protection Act (PASPA), GMBL is well-positioned to take advantage of what will be a burgeoning esports betting landscape.
(Esports Entertainment Group, Inc. [OTCQB: GMBL] is a client of RedChip Companies, Inc. GMBL agreed to pay RedChip Companies, Inc. a monthly cash fee for six (6) months of RedChip investor awareness services.)
Small Caps on Best Run Since 2002
The three-month outperformance of small-caps versus large caps is the most it’s been since 2002.
Small-cap stocks as tracked on the S&P Small Cap 600 outpaced the larger S&P 500 by 9.5% from February through May, according to data from S&P Dow Jones Indices. Outperformance this big has only happened in a three-month period 12 times since September 1989, S&P said in a note on June 4.
For the first time since December 2016, all 11 small-cap sectors posted gains last month. It's a quick turnaround from February, during which all 11 sectors were negative for the month. “This is only the ninth time in history since January 1995 that the small-cap sectors went from all losing to all winning in three months or less, and the last time it happened was in October 2015,” S&P found.
Quote of the Week
"There are a lot of risky companies built on one or two products, be wary of those."
- Dave Maley, Manager Ariel Discovery Fund
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