Akoustis Technologies Is A Puzzling Pre-Commercial Tech Story

It may not always be the case that if something seems to good to be true it probably isn’t, but healthy skepticism can be an investor’s best friend. To that end, Akoustis (AKTS) is both intriguing and confounding. While the idea of disruptive technology in the RF filter space is certainly appealing, particularly with an enterprise value of less than $200 million, I think you have to ask why a company with promising technology and no revenue would go public through a reverse merger instead of following the more typical venture-IPO route.

I don’t know whether the worst accusations against Akoustis are true, but I do know that a lot of what they’re attempting to do flies in the face of how business normally works, and I know competition in advanced filters is extremely fierce. It’s true that Akoustis is targeting markets that can support meaningful revenue, but with what I regard as unproven technology, unproven execution capabilities, significant barriers to adoption, and thin financial resources, this is at best a very risky proposition.

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Akoustis Technologies Is A Puzzling Pre-Commercial Tech Story

Seeking Alpha: Qorvo Hoping To Show One Plus One Is More Than Two

The smartphone space is a weird place these days. On one hand, there are worries that the best days of growth in the high end are already past. On the other hand, companies like Qorvo (NASDAQ:QRVO) and Avago (NASDAQ:AVGO) are looking at a world that still has a lot of room to adopt LTE handsets, each one of which offers richer switch, amplifier, and filter content.

I fully expect that Qorvo will eventually have to contend with lower-cost China-based RF component manufacturers, just as Qualcomm (NASDAQ:QCOM) has had to contend with lower-cost players in baseband, but I don't believe that cancels out the opportunity. Mid-to-high single-digit long-term revenue growth coupled with FCF margins in the 20%'s can support a fair value in the high $80's and I wouldn't rule out the possibility of Qorvo gaining share and/or exceeding its cost synergy targets.

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Qorvo Hoping To Show One Plus One Is More Than Two

Seeking Alpha: RF Micro Devices Near A Major Transformation

No company ever announces a merger/acquisition and tells its shareholders that they expect to waste their money and produce no long-term benefits from the transaction. But even after adjusting for hope and optimism, I think the logic of the RF Micro Devices (RFMD) - TriQuint (TQNT) merger holds up. Together, the two companies should be able to achieve meaningful operating cost synergies while offering a comprehensive line of RF products for the mobile market and emerging Internet of Things market.

In terms of value, though, I think the market has the transaction pretty well figured out. There is upside if the two companies can quickly generate more than $125 million in cost synergies, but $10 to $11 looks about right for RF Micro Devices today and likewise $16.50 to $18 for TriQuint.

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RF Micro Devices Near A Major Transformation