Akoustis Technologies, Inc.

AKTS Details

Akoustis Technologies, Inc. (NASDAQ: AKTS) is a rapidly expanding commercial production company that specialises in developing and manufacturing cutting-edge 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:

• Recent Commercial Offer: A top tier-1 RF module and filter provider signed a statement-of-work (SOW) / development order with AKTS for a new 5G mobile XBAWTM filter on February 22, 2022. The new filter will be manufactured at AKTS' Canandaigua, NY, facility, which will use the company's cutting-edge XBAWTM process technology and new in-house wafer-level packaging (WLP) capability. Akoustis will be in charge of the design, modelling, fabrication, assembly, and characterization of this novel filter, according to the customer's specifications.

Q2FY22 Results:

• Growth in Topline: The company reported a sharp uptick of 1.81x in revenues to USD 3.67 million in Q2FY22 (ended December 31, 2021) compared to USD 1.31 million in Q2FY21, driven by an increase in RF product revenue which comprises revenue from sales of RFM Integrated Device, Inc (RFMi) products.
• Increase in Net Losses: Despite a solid surge in the topline, AKTS witnessed an increase in net losses to USD 15.26 million in Q2FY22 vs. USD 11.91 million in Q2FY21, due to significant increase in operating expenses.
• Healthy Balance Sheet: As of December 31, 2021, the company had a cash balance of USD 67.47 million with no outstanding debt.

Key Risk:

• Customer Concentration Risk: A limited number of customers account for the majority of AKTS' revenue. The company's largest clients accounted for 47% and 19% of revenues in FY21 and FY20. As a result, even losing one of these clients could harm the company's bottom line.
• Reliance on Third-Party Suppliers: AKTS relies largely on third-party suppliers for raw materials and component requirements in its manufacturing operations. As a result, any significant difficulty with the suppliers could 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 FY1 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 38.85% in the past nine months and is currently leaning towards the lower end of its 52-week range of USD 4.58 to USD 12.87. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 6.63.

Considering the significant correction in the stock price, debt-free balance sheet, signing key Commercial Agreements with Tier-1 RF Module Producer, current valuation, and associated risks. We recommend a "Speculative Buy" rating on the stock at the current price of USD 5.54, down 0.36% as of April 18, 2022, 07:26 AM PDT.

Three-Year Technical Price Chart (as on April 18, 2022, at 07:26 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.