Akoustis Technologies, Inc.

AKTS Details

Akoustis Technologies, Inc. (NASDAQ: AKTS) is a rapidly growing commercial product company focused on developing and manufacturing ground-breaking radio frequency (RF) filter solutions for the wireless industry, utilizing 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:

• Acquires Majority stake in RFMi: On October 18, 2021, AKTS stated that it purchased a 51% stake in RFM Integrated Device, Inc. (RFMi), with the option to acquire the remaining 49% in 2022.
• Foraying in Timing and Frequency Reference Market: AKTS announced on October 14, 2021, that it is collaborating with a major manufacturer of Timing RF Components to create ultra-high frequency XBAW resonators for use in the customer's end products. AKTS has started sampling resonators for its customers and plans to ramp up production by the end of 2022 or the beginning of 2023.

FY21 Results:

• Rise in Total Revenue: The company reported a sharp uptick of 2.70x in revenues to USD 6.62 million in FY21 (ended June 30, 2021) compared to USD 1.79 million in FY20, due to an increase in revenue from foundry fabrication services and volume of filter and amplifiers.
• Increase in Net Losses: However, AKTS witnessed an increase in net losses to USD 44.16 million in FY21 vs. USD 36.14 million in FY20.
• Healthy Balance Sheet: As of June 30, 2021, the company had a cash balance of USD 88.32 million with no outstanding debt.

Key Risks:

• Customer Concentration Risk: Large purchases by a small number of consumers account for a significant amount of the company's income. In FY21 and FY20, the company's largest customers accounted for 47% and 19% of revenues, respectively. As a result, excessive reliance on a small number of clients for income might be detrimental to the company's long-term financial stability.
• Reliance on Third-Party Suppliers: AKTS relies heavily on third-party suppliers for raw materials and component requirements in its manufacturing operations. As a result, any substantial issue experienced by the suppliers might cause a delay in the final product's availability, harm marketing efforts, and reduce income.

Outlook: AKTS expects to raise annual production capacity at its New York fab to about 500 million filters per year by the end of FY21, based on fast-rising sales funnel activity and continuous discussion with customers regarding projected ramps in 5G mobile WiFi 6 and WiFi 6E in FY22.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

AKTS Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

AKTS stock price has fallen 57.68% in the past nine months and is trading close to the lower end of the 52-week range of USD 7.14 to USD 19.15. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 30.65. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 8.93.

Considering the company's growth prospects, low leverage, recent acquisitions, current valuation, and associated risks, we recommend a "Speculative Buy" rating on the stock at the current price of USD 7.19, traded flat, as of October 25, 2021, 11:04 AM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

* Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.