Akoustis Technologies, Inc.

AKTS Details

Akoustis Technologies, Inc. (NASDAQ: AKTS) is a rapidly growing commercial production company specializing in developing and manufacturing cutting-edge radio frequency (RF) filter solutions for the wireless industry, using its patented MEMS-based Bulk Acoustic Wave (BAW) technology and a unique manufacturing process flow (also known as XBAW) for filters used in RF Front-End (RFFE) applications.

Latest News:

• Second XBAW Filter Shipped: On May 02, 2022, AKTS reported that the second of two filters in development for a multibillion-dollar tier-1 5G mobile RF component OEM customer had been shipped. Akoustis received a purchase order to improve the previously manufactured initial filter design. The two filters are being developed to address challenging 5G/Wi-Fi coexistence concerns in the mid and ultra-high bands and are being examined for usage in filter modules for 5G smartphones, tablets, wearables, and other mobile devices by the customer.

Q3FY22 Results:

• Growth in Topline: The company reported a sharp uptick of 83.04% in revenue to USD 4.61 million in Q3FY22 (ended March 31, 2022) compared to USD 2.52 million in Q3FY21, driven by increase in RF product revenue which comprises revenue from sales of RFM Integrated Device, Inc (RFMi) products.
• Increase in Net Losses: However, despite surge in revenue, AKTS witnessed an increase in net losses to USD 14.69 million in Q3FY22 vs. USD 10.18 million in Q3FY21.
• Healthy Balance Sheet: As of March 31, 2022, the company had a cash balance of USD 55.87 million with no outstanding debt.

Key Risk:

• Customer Concentration Risk: The majority of AKTS' revenue comes from a small number of customers. In FY21 and FY20, the company's largest clients accounted for 47% and 19% of revenues, respectively. As a result, even losing one of these clients could harm the company's profits.
• Reliance on Third-Party Suppliers: AKTS relies heavily on third-party suppliers for raw materials and component requirements in its production processes. As a result, any significant problems with suppliers could result in a delay in the final product's availability, hampered marketing efforts, and lesser 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 54.63% in the past nine months and is currently leaning towards the lower end of its 52-week range of USD 4.22 to USD 11.50. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 5.39.

Considering the significant correction in the stock price, debt-free balance sheet, shipping second XBAW filter, current valuation, and associated risks. We recommend a "Speculative Buy" rating on the stock at the current price of USD 4.36, down 7.43% as of May 05, 2022, 07:37 AM PDT.

Three-Year Technical Price Chart (as on May 05, 2022, at 07:37 AM PDT). 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. 

Note 3: The report publishing date is as per the Pacific Time Zone.