Founder, BWS Financial Inc

Hamed Khorsand

Founder

Independent Stock Specific Research

BWS Financial Inc

BWS provides independent stock specific research focused on companies with distinct value that are going through a special situation where there is a tangible catalyst not priced in. The catalyst can be anything from new product, restructuring, M&A, management change, change in business strategy, etc. BWS’s focus is to understand the change and evaluate the potential return for investors.

BWS utilizes a self formed proprietary approach in discovering stocks by putting great emphasis on deep research. BWS does generate short recommendations following a similar criteria.

Equity Bottom-Up

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Calix (CALX) has benefited from an increase in small broadband service providers adopting the Company’s software solutions during a time when people were staying at home, but those trends are now changing. Service providers are reporting a slowdown in broadband customers as the industry begins to experience some of the cyclicality that has usually been present each year.</li></ul> <ul type="disc"><li>In the last two weeks Comcast Corp. (CMCSA) and Altice USA (ATUS) have reported a decline in broadband subscribers. The larger service providers might be reporting what the smaller service providers were already going through this year. We believe these smaller customers are more likely to change their spending habits quickly than commit to spending money when subscriber trends change.</li></ul> <ul type="disc"><li>During the June quarter of this year, service providers were reporting an increase in subscribers and were painting a generally positive picture for the rest of the year. Since then, there has been a change in consumer habits. There are fewer people who need to purchase a subscription for back to school since they are already a customer thanks to either cord cutting or staying home because of COVID-19.</li></ul>


Calix (CALX) has benefited from an increase in small broadband service providers adopting the Company’s software solutions during a time when people were staying at home, but those trends are now changing. Service providers are reporting a slowdown in broadband customers as the industry begins to experience some of the cyclicality that has usually been present each year. In the last two weeks Comcast Corp. (CMCSA) and Altice USA (ATUS) have reported a decline in broadband subscribers. The larger service providers might be reporting what the smaller service providers were already going through this year. We believe these smaller customers are more likely to change their spending habits quickly than commit to spending money when subscriber trends change. During the June quarter of this year, service providers were reporting an increase in subscribers and were painting a generally positive picture for the rest of the year. Since then, there has been a change in consumer habits. There are fewer people who need to purchase a subscription for back to school since they are already a customer thanks to either cord cutting or staying home because of COVID-19.

<ul type="disc"><li>
Calix (CALX) reporting first quarter results does little to deviate from the challenges the Company faces this year. CALX had already told investors the first quarter would be strong due to timing shift in revenue from the fourth quarter. The Company shipping more legacy hardware to small communications service providers (“CSP”) in the quarter helped drive performance.</li></ul> <ul type="disc"><li>CALX has experienced a decline in revenue from large CSPs, in our view, reducing the revenue quality of CALX’s business. Small CSPs are not dependable to continue spending at the rate CALX requires to continue growing revenue.</li></ul> <ul type="disc"><li>Between the time we initiated coverage and when CALX reported first quarter results, the Company issued a press release nearly every business day to highlight how CSPs were using CALX products. CALX is not a product quality story.</li></ul> <ul type="disc"><li>The risk CALX faces is the demise of capital spending as consumers change the way they consume data. Plus the unavoidable impact the global chip shortage would have on the business.</li></ul>


Calix (CALX) reporting first quarter results does little to deviate from the challenges the Company faces this year. CALX had already told investors the first quarter would be strong due to timing shift in revenue from the fourth quarter. The Company shipping more legacy hardware to small communications service providers (“CSP”) in the quarter helped drive performance. CALX has experienced a decline in revenue from large CSPs, in our view, reducing the revenue quality of CALX’s business. Small CSPs are not dependable to continue spending at the rate CALX requires to continue growing revenue. Between the time we initiated coverage and when CALX reported first quarter results, the Company issued a press release nearly every business day to highlight how CSPs were using CALX products. CALX is not a product quality story. The risk CALX faces is the demise of capital spending as consumers change the way they consume data. Plus the unavoidable impact the global chip shortage would have on the business.

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

The S&amp;P 500 has paused just below logical resistance at the downtrend, and we believe the equity market is in wait-and-see mode for incremental information on a variety of issues including trade talks, Fed action and earnings.  Meanwhile, We are upgrading equal-weighted Technology to overweight. Our equal-weighted Tech Sector has surged to the top of our RSR ranks due to broad-based strength in semiconductors last week. Solar stocks are another Group that is emerging as leadership. In today’s report we highlight attractive small-cap Technology stocks, as well as selection of key stocks (MSFT, AMZN, GOOGL, V, NFLX, and ADBE) and subsectors (semis, biotech, and homebuilders) which are all up against logical price resistance.

The S&amp;P 500 has paused just below logical resistance at the downtrend, and we believe the equity market is in wait-and-see mode for incremental information on a variety of issues including trade talks, Fed action and earnings.  Meanwhile, We are upgrading equal-weighted Technology to overweight. Our equal-weighted Tech Sector has surged to the top of our RSR ranks due to broad-based strength in semiconductors last week. Solar stocks are another Group that is emerging as leadership. In today’s report we highlight attractive small-cap Technology stocks, as well as selection of key stocks (MSFT, AMZN, GOOGL, V, NFLX, and ADBE) and subsectors (semis, biotech, and homebuilders) which are all up against logical price resistance.

U.S. Equity Strategy: Market in Wait-And-See Mode; Upgrading Tech

United States

Calix, Inc. provides communications access systems and software that enable communications service providers, or CSPs, to connect to their residential and business subscribers. The Company's products encompass its multiservice, multiprotocol access platform and its Ethernet service access platforms.

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Calix Inc (CALX US)

CALX: Risk of Throttling Growth

A slowdown in subscriber adds should lead to CALX experiencing a slowdown in spending from small broadband service providers, who do not have the...

BWS Financial Inc

CALX: Risks Abundant

Q1 beat hides the scope of how revenue quality is degrading. The Company is now facing a loss of revenue from large service providers along with...

BWS Financial Inc

U.S. Equity Strategy: Market in Wait-And-See Mode; Upgrading Tech

The S&P 500 has paused just below logical resistance at the downtrend, and we believe the equity market is in wait-and-see mode for incremental...

Vermilion Research

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