Akoustis Technologies, Inc.

AKTS Details

Akoustis Technologies, Inc. (NASDAQ: AKTS) is a company dedicated to developing, designing, and manufacturing innovative radio frequency (RF) filter products for the wireless industry, including smartphones and tablets, cellular infrastructure equipment, Wi-Fi Customer Premise Equipment (CPE), and military and defense communication applications. The company earns money by selling filter items to individual customers through purchase orders, some of which include underlying master sales agreements that establish the terms of the product sales.

Q2FY22 Results:

• Growth in Topline: AKTS's revenues increased by 1.81x to USD 3.67 million in Q2FY22 (ended December 31, 2021) from USD 1.31 million in Q2FY21, owing to an increase in RF product revenue, including revenue from sales of RFM Integrated Device, Inc (RFMi) products.
• Increase in Net Losses: However, AKTS's net losses (attributable to common shareholders) increased to USD 15.26 million in Q2FY22 from USD 11.91 million in Q2FY21 due to a substantial operating expenditure.
• Strong Balance Sheet: The company had a cash balance of USD 67.47 million as of December 31, 2021, with no outstanding debt.

Key Risks:

• Customer Concentration Risk: A limited number of customers account for most of AKTS' revenue. The company's largest clients accounted for 47% and 19% of revenues in FY21 and FY20, respectively. As a result, even the loss of one of these clients could harm the company's bottom line.
• Reliance on Third-Party Suppliers: AKTS relies largely on third-party suppliers for its manufacturing operations' raw materials and component requirements. As a result, any severe issue encountered by the suppliers may cause a delay in the final product's availability, impaired marketing efforts, and lower revenue.

 Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation:

AKTS' stock price has fallen 53.29% in the past twelve months and is currently leaning towards the lower end of its 52-week range of USD 4.58 to USD 14.38. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 8.10.

Considering the significant correction in the stock price, strong balance sheet, current valuation, and associated risks, we recommend a "Speculative Buy" rating on the stock at the closing price of USD 6.54, up 0.62% as of April 01, 2022.

Three-Year Technical Price Chart (as of April 01, 2022). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary:

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors' appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above.