February 20, 2025

At the index level, small caps have hardly changed since last Thursday, but it sure feels like there’s a lot of downward drift out there.

I could say the same thing for the broad market. Things seem to be getting a little more tense. But then again, the S&P 500 and Nasdaq just hit fresh all-time highs.

I am a little concerned that it’s going to be harder to ignore all the background noise once earnings season is over. Because there is a lot of noise.

That said, the stock market doesn’t always care about the noise.

The minutes from the January FOMC meeting (released this week) confirm that the Fed is still willing to lower the fed funds rate if inflation gets back to 2%. Nobody knows if the data will support the June cut that the market is looking for, but having cuts on the table remains a potential tailwind for the market.

The Fed also said it may pause or slow down its quantitative tightening (QT) program, a shift that typically leads to lower interest rates. Combined with potential rate cuts later in the year, this could help keep a lid on yields, which is supportive for the stock market.

These macro themes aren’t very exciting. And they’re certainly not going to attract as much attention as all the disruptions going on in Washington. But they may well be what the market cares more about.

Recent Changes
None

Updates

Alkami Technology (ALKT) just dipped below its 200-day moving average line at 33 yesterday. I’m surprised by this weakness given the solid report from peer Q2 Holdings (QTWO) last week back, and today’s positive reaction from Clearwater Analytics (CWAN), another financial software company, to that company’s Q4 report. Management will report next Thursday, February 27. The company has just begun the marketing push for Alkami Co:lab 2025, its annual user conference. The event will take place from March 31 to April 2 in Nashville, TN. BUY

Confirmed Earnings Date: February 27

Artivion (AORT) has slipped below both its 20- and 50-day moving average lines this week. A retreat of this magnitude has been a buy signal going back about 12 months. The stock (currently at 28.2) has not traded down to its 200-day moving average line (at 26.7) over that time frame. We have an earnings report coming up on Monday and I wonder if this weakness is reflective of pre-report jitters. It may also have to do with some uncertainty regarding the future of healthcare policy (ACA, Medicare, Medicaid, etc.). No new company-specific news since the update on the AMDS PERSEVERE trial from a couple weeks ago. The data showed that, one year following AMDA implantation, there was sustained benefit in terms of minimal new occurrence of stroke, renal failure requiring dialysis, or myocardial infarction. Follow-up CT scans suggest AMDS prevents DANE tears, which typically occur in up to 70% of patients following hemiarch repair without AMDS. Translation to all this: it’s good news. Data from this study will be used to support Artivion’s upcoming application to the FDA for premarket approval of the AMDS (expected by end of the year), which was recently granted a Humanitarian Device Exemption (HDE) from the FDA. BUY

Confirmed Earnings Date: February 24

AvePoint (AVPT) hit another new all-time high last week and looked very solid until today when it’s trading down 7%. There is no new news. Yesterday the senior VP of Partner Strategy was interviewed at Nasdaq MarketSite. I did not watch the interview yet. Software stocks are trading down almost across the board today and I suspect AVPT’s weakness reflects that. HOLD

Confirmed Earnings Date: February 27

Delcath (DCTH) was added two weeks ago (we started with a half-sized position) and is down about 5% since. The company’s targeted, whole-organ treatment system (focused on liver-dominant cancers) delivers a high dose of a chemotherapy agent directly to the liver, which is isolated from the rest of the patient’s vascular system. It gained FDA approval for the treatment of metastatic hepatic dominant uveal melanoma (mUM) in August 2023. This is the first and only FDA-approved whole-liver directed therapy. Delcath management thinks HEPZATO can become the U.S. market leader for treating mUM. Leadership believes HEPZATO has the potential to treat several other cancers in the liver as well, and two Phase 2 trials should begin this year. Delcath is in the early stages of commercializing its technology, so it is in the supernormal stage of revenue growth. On January 13 management pre-released Q4 2024 results that surpassed expectations. Management said Q4 revenue should be about $15.1 million, roughly 21% higher than expectations. Implied full-year 2024 revenue is $37.2 million, (+1,671% over 2023). The official report is on March 6. BUY HALF

Confirmed Earnings Date: March 6

Docebo (DCBO) doesn’t have any new news to share and continues to trade sideways in the 40 to 44 range. It has traded toward the lower end of that range over the last couple of days. Looking forward to the earnings report next Friday to potentially get the stock back in gear. Consensus estimates call for Q4 revenue to grow by 14% and adjusted EPS to grow by 6.4% to $0.27. Looking out into 2025, the company is expected to grow revenue by 14% and EPS by 27%. BUY

Confirmed Earnings Date: February 28

Enovix (ENVX) reported after the close yesterday and I summarized the results and my thoughts in a Special Bulletin sent earlier today. Bottom line is the company is making solid progress. Keeping at buy. BUY

Earnings: Done

FTAI Infrastructure (FIP) hasn’t had any news since completing the refinancing for Long Ridge Energy, raising $600 million ($100 million more than previously estimated) of 8.75% senior secured notes due 2032. Combined with the previously announced $400 million senior secured term loan, this debt financing will be used to pay off around $600 million in existing loans and for general corporate purposes. FIP stock continues to drift lower, a surprising trend in my view given the numerous expansion projects within its various businesses that should drive considerable revenue and EBITDA growth in the coming years. That said, this is not a well-known stock and it has a market cap under $800 million. And management doesn’t make a huge effort to communicate with investors. We’ll get all the details on the current state of the business next Thursday when Q4 earnings are reported. That may be a make-or-break event for us. BUY

Confirmed Earnings Date: February 27

Mama’s Creations (MAMA) held a virtual Investor Day last week and I detailed the relevant updates. No news since. The stock has drifted a little lower over the last four sessions and trades roughly 3% below our entry point. Management is looking to deliver double-digit growth in 2025 with gross margins in the high-20% area and growing from there. That should support upward movement in the stock. But if I’m being completely honest, I am getting a little impatient with the lack of momentum here. Keeping at buy for now but considering our options. BUY

Expected Earnings Date: April 23

Peloton (PTON) stock is selling off today but remains well above its pre-earnings report level. No new news. The report was good and a number of analysts upgraded the stock, which is still far from a consensus buy (i.e., lots of room for more investors & analysts to get on board). BUY HALF

Confirmed Earnings Date: February 6

Perpetua Resources (PPTA) stock appears to have stabilized after a significant pullback last week (roughly -20%) following the release of a Financial Update. I detailed my thoughts on that update in an extensive Special Bulletin last week, so I won’t repeat them here. The punchline is that the Financial Update is part of the process for formalizing a loan application with the U.S. Export-Import Bank and it updates some of the assumptions made in previous project estimates to account for increases in costs, the price of gold and the price of antimony. The stock’s reaction implies the market thinks the Stibnite project isn’t as valuable as previously expected, and there’s some legitimacy to that. On the other hand, the update is using current gold and antimony prices, which may be considerably higher in a couple of years when the project is actually in operation. As I said in my update, our primary objective is to own this stock through the value-creating process of advancing to production stage. We don’t necessarily need to own it for the long term. Based on the new data (which is guaranteed to change over time) I still believe there is tremendous value in PPTA stock. Given the stock’s significant drop last week, the class action lawyer sharks have come out of the woodwork, but so have some analysts reiterating their view their shares should be trading significantly higher than they are right now (i.e., closer to the 16 – 20 range. BUY HALF

Expected Earnings Date: March 14

Weave (WEAV) stock is trading just below multi-year highs as we head into this afternoon’s earnings report. Consensus estimates call for revenue of $53.2 million (+16.5%) and adjusted EPS of $0.02 (up from -$0.01 in Q4 2023). The company has a history of beating expectations. Looking into 2025, the current expectation is for WEAV to grow revenue by 16.1% to $235.7 million and deliver EPS of $0.11, up from $0.04 in 2024. Naturally, we’re looking for management to signal results should be better than that. BUY

Confirmed Earnings Date: February 20

That’s it for this week. Please email me at tyler@cabotwealth.com with any questions or comments about any of our stocks, or anything else on your mind.

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