Alphawave IP Group PLC  

Alphawave IP Group PLC (LSE: AWE) is an FTSE main market-listed technology service provider that enables high-speed connectivity in the global technology infrastructure. This Report covers the Key Recommendation Rationale, Conclusion, and Recommendation on the stock.

Key Recommendation Rationale – Sell at GBX 155.21

• Resistance near Current levels: AWE’s stock price crossed the Resistance (R2) which was stated in the previous report on 17 April 2024 and might witness some sell-off from the current levels. Considering the market conditions and the price action, it is prudent to exit the stock, as the prices might pull back from these levels.
• Sluggish Profitability Margins: In FY23, the Gross margin of AWE was 51.4% against the industry median of 51.7%, and the EBITDA margin of AWE was 6.8% in the reported period (FY23) as compared to 27.8%. Also, the net margin slipped to a negative 15.9% in FY23 versus the industry median of 17.9%.
• Expensive Valuation: The stock of AWE is currently offered at 4.0x on EV/ Sales based relative valuation (NTM) as compared to the industry (Technology) median of 2.8x. On Price/ Earnings-based relative valuation (NTM), the stock is valued at 34.8x which is higher than the industry median of -9.3x.
• Macroeconomic Risk: The market sentiments can remain weak in the short-term due to the subdued consumer disposable income, geopolitical tensions, and political risks.

Valuation Methodology: Price/Earnings Approach

Share Price Chart  

Conclusion

Based on the notional gains, macroeconomic challenges, and price action stance, a "SELL" recommendation on Alphawave IP Group PLC (LSE: AWE) has been given at the current market price GBX 155.21 (as of 12 June 2024, 08:15 AM GMT+1).

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is 12 June 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and/or technical analysis taking into consideration both short-term and long-term scenario.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Note 6: Dividend Yield may vary as per the stock price movement.