Interactive Investor

Recently floated semiconductor firm’s shares rocket

21st September 2021 15:32

Graeme Evans from interactive investor

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Chip producer has seen its share price jump by more than 18% on a lively day for the stock market.

The first semiconductor firm to list on London's main market since 2004 looks to be overcoming investor scepticism after shares soared 18% following maiden results.

Toronto and Cambridge-based Alphawave IP (LSE:AWE), whose technology enables data to travel faster and more reliably using lower power, sent its valuation surging after increasing full-year guidance based on its order book and visibility of new opportunities.

The current shortage of semiconductor manufacturing capacity has clouded the investment story since the May IPO, but Alphawave insisted today that the situation only served to reinforce the importance of chip technology on a global scale.

It added: “We remain very confident in the outlook for our business and the opportunities we have to deliver sustainable growth over the medium and long term.”

The company was valued at £3.1 billion in one of the largest semiconductor IPOs in history and the largest IPO of a North American company on the London Stock Exchange.

The listing raised £347.1 million and drew comparisons with Arm Holdings, the chip designer that soared in value before being taken over by Softbank for £23.4 billion in 2016.

Alphawave fell from its IPO price of 370p before rallying to 451p in August, only to decline again to 341p prior to today's interim results. The stock was back above 400p after the increase to guidance and as analysts at Barclays raised their price target by 5% to 500p.

Barclays said there was “much to like” in the results, particularly the signing of six new customers to end the period with 17 and take the number of contracts to 36 since the company was founded in 2017.

Half-year revenues of $27.6 million (£20.2 million) were 140% higher than the same period a year earlier as bookings surged fivefold to $196.1 million (£143.3 million). Adjusted profits lifted 163% to $11.4 million (£8.3 million) based on an improved margin of 41%.

Chief executive and co-founder Tony Pialis said: “The first half of 2021 was a breakout period for us, with exceptional growth in revenue and bookings which underpins our confidence in raising full year guidance.”

He predicted that demand for the company's market-leading intellectual property, combined with the platform provided by the IPO, will sustain its long-term growth trajectory.

Alphawave's chip technology is focused on the drive for greater wired connectivity speeds in data centres, or in cloud computing, 5G wireless infrastructure and artificial intelligence.

Pension platform buzzing

Another company posting results for the first time today was PensionBee (LSE:PBEE), with the online pension platform also sounding an upbeat note after forecasting high double-digit revenue growth for this year, in line with the guidance provided at the time of IPO in April.

Assets under administration increased by 117% to almost £2 billion as its number of registered customers jumped 81% to 538,000. But increased investment in marketing and technology meant the half-year loss widened to £12.8 million.

The company, which raised £55 million from institutional investors and customers in the IPO, continues to target a monthly earnings breakeven point by the end of 2023.

Shares rose a penny to 147.9p but remain below the 165p starting point in April. Analysts at Keefe, Bruyette & Woods have a target price of 210p.

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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