Mid-Week Update: Making Money on the Necessary Parts for Autonomous Cars

We check in with our three Alpha candidates and see what happened for the first two trading days of week. We're still waiting for one to release their earnings on Thursday. There isn't one specifically that looks to be our sure Alpha for the week...


This week we’re looking at three companies that all approach artificial technology in a different way. One thing that is the same among all of them is that each has some sort of stake in technology that will be used in autonomous vehicles.

Just yesterday we saw an article pop up on The New York Times…. Driverless Cars Arrive in New York City.

Ok they aren’t on the bustling streets yet, but beginning today, six autonomous cars will start shuttling passengers around the Brooklyn Navy Yard. Of course, this is just another test in a contained area, but it still another example of how the technology is moving forward…. despite not moving as quickly as everyone had thought just a few years ago.

The company Optimus Ride has already provided over 20,000 autonomous vehicle rides around the Boston Seaport neighborhood where it is based. And the company has not had any accidents or injuries.

We think this will be a fascinating area of technology to keep watching. And automotive companies are going to need the latest and greatest in sensors, cameras and cellular data. That’s where our Alpha candidates come in…

First up, we’ve got CEVA, Inc (CEVA). CEVA is a company that partners with over 370 other names in the technology industry to provide the best in signal procession, sensor fusion and AI processors. It’s goal is to contribute to a smarted and more connected world.

We mentioned Monday that CEVA will be announcing its second quarter earnings on Thursday. We’ll give you a little update in our Week in Review on Saturday, but for now we’ll take a look at the latest earnings released at the beginning of May.

For the first quarter of 2019, the company saw total revenue of $17 million. This was a 3% decrease when compared to the $17.6 million for the first quarter of 2018. The main culprit seems to be a decrease in royalty revenue of 20%. Licensing related revenue was up 9% but that wasn’t enough to completely balance out that loss.

The company completed eight licensing agreements during the fist quarter of the year. Three of them were for smart sensing products. One of those specifically was the NeuPro AI processor that is part of a licensing agreement with one of the world’s largest OEMs. The other five were for connectivity products. Three of those with key players targeting 5G networking.

Plus, we just have to point out that even though the company continues to make R&D investments, it ended the quarter with no debt.

Just yesterday CEVA announced a strategic partnership with Immervision. Immervision is a developer of wide-angle lenses and image processing technologies. Its technology is currently used by names such as Garmin, Sony and Lenovo. The deal gives CEVA exclusive licensing rights to Immervison’s advanced portfolio of technology.

On Monday, shares opened at $25.81 and closed yesterday at $26.27. That’s an increase of 1.7% for the first 48 hours of the trading week as investors seem optimistic leading up to tomorrow’s earnings release.

Next up, we’ve got Foresight Autonomous Holdings Ltd. (FRSX). Foresight Autonomous Holdings uses proprietary technology to develop vison systems and cellular based solutions for the automotive industry.

Foresight should announce it’s second quarter earnings in the next two weeks. So, we’ll take a look at the first quarter results that were released in May.

For the first quarter of 2019, the company saw a net loss of $3.3 million. That’s compared to a net loss of $9.4 million for the previous quarter. This is one instance where it makes more sense to compare the current quarter to the previous quarter instead of the same quarter of the previous year.

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The company is spending less on research and development and it is finally seeing the profits from its prototypes.

The company’s QuadSight Vison System was selected as gold winner in the 2019 Edison Awards. And the prototype has been purchased by one of Israel’s leading defense companies, as well as a Japanese and American automotive supplier.

Shares opened on Monday at $1.61 and closed yesterday at $1.64. That’s an increase of 1.8% over the first two days of the trading week.

Finally, we’ve got Materialise NV (MTLS). Materialise NV is a 3D printing giant. It has been in the industry since 1990 and has the goal to find more extraordinary uses for 3D printing’s potential. The company announced its second quarter earnings just yesterday.

Revenue for the first quarter increased 7.4% when compared to the second quarter of the previous year. The company saw deferred revenue from annual software sales and maintenance contracts increase. The only thing better than collecting income now, is setting up to keep collecting income over time.

The downside is that some of those software sales have been now pushed into the third quarter. When broken down by revenue, Materialise Software only increased 2.1%. Materialise Manufacturing segment saw revenues increase 5% and the Medical segment saw revenues increase 17.3%. It’s no surprise that the medical segment is seeing the most gain. And that’s also where the company has been looking for more investment.

The management maintained its outlook for the full-year 2019, even though it will see the addition of its Engimplan investment. This investment is enabling Materialise to introduce Materialise’s 3D printed implants for the fast-growing Brazil market. This was surely the news that made investors nervous.

It’s usually a good sign when a company reaffirms its full-year guidance, but not when it reaffirms despite the addition if income from a recent investment. The company acquired 75% of Engimplan and this market it primed for the taking.

During yesterday’s trading session, shares dropped all the way to $16.57, but then recovered a bit in the afternoon. Shares opened Monday at $18.70 and closed yesterday at $17.66. That’s a loss of 5.5% over the first two days of the trading week.

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