--- the subscriber area has no ads and those above are not selected or endorsed by this site ---


volatility, Resonant win, AES 2Q19 schedule and more +3

14:19 09-Jul-19


Though markets are flattish on average, they are showing some increased volatility today, which I suspect is a harbinger of larger and more sustained moves to come.  RESN is up well over 10% on a press release stating that an existing fabless customer has licensed 3 new designs.  The mention that this

leading supplier of RF front-end components to the mobile phone market, it is already on phone OEMs’ Approved Vendor List (AVL), which means faster time to market for its products and our related royalty revenue
is encouraging, but this is very unlikely to change the race against dilution.  As of the end of March had about $15M on the balance sheet.  So it will probably to raise funds again by the end of the year unless royalties from prior design wins begin ramping much more quickly, which is not completely beyond the realm of possibility, despite the trade wars.  What's even more intriguing than the recovery of a highly shorted stock like RESN is the 8% bounce in MTSI on no explicitly related news.  In the absence of further news, I don't think either run is especially sustainable unless trade issues actually get resolved or the market resumes its climb.

ABB is also pulling back a little on news that it is exiting its solar inverter business at a $470M cost.  This is a no-brainer in the face of Chinese competition, and I'm surprised it took this long.  Look for other adjustments to follow, and earnings metrics to gradually improve.

I've long said that utilities and services are the ways to invest in renewables, and we'll get an update on that from the 2Q19 AES report, which is scheduled for the morning of August 6th.  Average analyst estimates call for earnings of 29 cents per share from $2.4b in revenue, which is expected to grow to $2.8b this quarter.  My interest here is in how the company is beginning to use batteries to allow non-peaking natural gas generation to serve peak demand as California struggles to keep the lights on.  Nonetheless, I am unlikely to cover the call in real time while AES remains in the mid to high teens. 

Instead, I'll just mention now that while Clearway's PPAs are probably safe, probably is not certainly and CWEN doesn't seem to be pricing that in.  The only really relevant thing that Clearway investors have learned so far this week is that PG&E would have to exit bankruptcy by June 30th in order to access the pending state wildfire fund.  Invest carefully.