The Bot Brief
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"There is no force on earth more powerful than an idea whose time has come." - Victor Hugo
Bots in The News:
The jobs report, the FOMC meeting, the first quarter GDP numbers, the coronation of a King, and Cinco de Mayo all had their own impact on the equity markets this week, however, failed to provide any meaningful impact on market trajectories. The job market remains tight, and wages grew at a .5% pace during the month. The Fed raised rates an expected 25 bps but softened their rhetoric regarding future increases. GDP’s first quarter came in at an unexpected 1.1% rate (well below the 2% that was forecast), Charles became the King of England and Cinco de Mayo sold a lot of Coronas (to the dismay of Bud Light).
With all the economic and social news, one might have expected the stock markets to have a significant volatility. Indeed, there were some strong moves during the week, including Friday’s 546 point move by the Dow and a sparkling 2.2% jump by the NASDAQ. However, for the entire week, the S & P 500 fell 80 basis points while the Bot Index declined 59 bps.
With the bots eeking out a slight ‘win’ over the broader market, the impact of one of the Bot Index’s holdings made a dramatic difference in the overall results. Faro Technologies’ stock traded down over 40% following a report that its earnings included a loss of $21.2 million, or ($1.12) per share compared to a net loss of $9.7 million and ($0.53) per share in the prior year period. Adjusted EBITDA came in at ($5.5) million. Shortly following the virulent move in the stock, the CEO retired, and the Board announced a new direction for the company.
There were several companies within the Bot Index that experienced strong returns for the week. Many of the gainers were a result of good earnings for the quarter.
Cognex Corp. reported quarterly earnings of $0.13 per share, beating consensus estimates of $0.09 per share. The Board boosted the stock dividend by half a cent over last year’s quarter. The stock rose by 4%.
Accuray Inc. continued its winning streak after its surprise earnings and revenues that led to a 14+% gain the prior week. This week the stock rose another 6%.
Immersion Corp. reversed its weakness trend that saw the stock down 22% in the last month by gaining 7.74% this week. The stock led the Bot Index and was subject to a research report that said, ‘The stock has been sliding but the fundamentals remain strong.”
On Tuesday, Azenta Corp. will report earnings and revenues for the quarter this Tuesday the 9th. Investors evidently are anticipating a good report and boosted the stock nearly 5% during the week.
Still Buzzing Around:
As we discussed in the prior week’s Bot Brief, we have had considerable interest in the use of automation in agriculture. In fact, quite a few years ago we penned a research report on the world’s reduction of arable land and the need for agriculture products to meet the demands of a growing world population.
This week we noted an article published by Bloomberg entitled “Flying Tractors Are a Window Into Farming’s Future”. The lead paragraph posted, “AI-guided drones can spray fertilizer, apply fungicide and sow seeds with a precision that leaves traditional heavy equipment in the dust.” In an interview the article continues with, “A ‘featherweight flying tractor’ — that’s how Arthur Erickson, chief executive of manufacturer Hylio Inc., described his company’s agricultural drones. The Houston-based startup has seen demand for its drones soar over the past three years; roughly 700 of Hylio’s drones are now at work treating 700,000 acres of cropland annually.”
While at Balcones Investment Research we were concerned over the compacting of topsoil by continual tractor tire runs, drone delivery of seed, herbicides, and fertilizers can completely remove that worry. Not only can AI enhance the delivery of crop needs, but it can also do so with pinpoint accuracy, with much less time involved, less labor and with better utilization of energy than traditional tractors. While it is unlikely that drones can impact the harvesting process of mature crops, it is a huge step in agriculture efficiencies.
Member: American Economic Association, Society of Professional Journalists, United States Press Association. Institute of Chartered Financial Analysts, Robotic Industries Association (now A3 Automation), Member IEEE.
The Bot Brief is a weekly newsletter designed for economists, investment specialists, journalists, and academicians. It receives no remuneration from any companies that may from time to time be featured in the brief and its commentaries, analysis, opinions, and research represent the subjective view of Balcones Investment Research, LLC. Due to the complex and rapidly changing nature of the subject matter, the company makes no assurances as to the absolute accuracy of the material presented.