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Brexit, hydrogen and CVA redux ?3
14:53 22-Oct-19
Parliament has lived down to my expectations by approving Johnson's deal for further debate and amendment, but rejecting the timetable that he had attached to it. He had threatened to withdraw the legislation in that case, but is now saying that it be "paused" until the E.U. responds on delaying Brexit.
While we wait on the latest from Parliament...
CVA has fallen almost 10% today in conjunction with a downgrade from Raymond James. There's a good chance that private publication of this note is what cause the original buying opportunity a week ago. The funny thing is, I would agree with the neutral ("Market Perform") at the $17+ level where the stock was trading before rating this note hit. I haven't seen any reasoning from the note, however, I think the market reaction only lowers the bar for earnings on Thursday night. Even a business as usual report the acknowledges the macro challenges should be enough to make current price points below $15.50 very attractive.
I'm not sure the same can be said about ABB, which released a trio of press releases on cybersecurity, autonomous tugboats, and supporting liquified hydrogen production in Australia, for export to Japan. The last one is the only point that really interests me, and more with respect to WPRT, since hydrogen engines are the next step for Westport. Hydrogen has been cited by the IEA as a mostly overlooked energy solution and it is synergistic with natural gas. Widespread supply and transportation would be one of the main barriers to adoption, so the new Australian plant is a potentially big step. WPRT is in a different class from the other two stocks, and risks include a new initiative on aluminum-air batteries in the U.K., where the missing piece of the puzzle is the recycle cost. Still, the stock looks like a value to me.
I'll update again, once Parliament actually manages to complete a vote.