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2 Radio Frequency Stocks to Watch in a Promising Industry
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The Zacks Semiconductors - Radio Frequency industry is riding on rapid deployment of 5G networking, which is gaining importance from the rapid proliferation of Internet of Things (IoT), Advanced Driver Assistance Systems (ADAS) and Augmented Reality/Virtual Reality (AR/VR) devices. The democratization of 5G smartphones is a tailwind for the industry players. This has bolstered demand for radio-frequency semiconductor solutions, which enhances the prospects of prominent industry players like Akoustis Technologies (AKTS - Free Report) and RF Industries (RFIL - Free Report) . Nevertheless, lingering impacts of the coronavirus pandemic-led business volatility remain a concern. Moreover, the ongoing Russia-Ukraine conflict and fresh COVID-induced lockdowns in China increase uncertainty.
Industry Description
The Zacks Semiconductors - Radio Frequency Industry comprises companies that provide Radio Frequency (RF) solutions, Front-end Modules (FEMs), low-noise amplifiers, diodes, multi-chip modules (MMICs), optical components, surface acoustic wave (SAW), bulk acoustic wave (BAW) technology-based antenna-plexers, and film bulk acoustic resonator (FBAR) filters to enable smartphone devices to function more efficiently in congested RF spectrum. They serve a wide array of industries with their solutions finding ample application in 5G and smartphone equipment, aerospace and defense, optical networks, cellular base stations, automotive and smart home applications. Most of these companies utilize robust wafer fabrication technologies as well as ZigBee, Bluetooth Low Energy (BLE), Thread, silicon germanium and Gallium Nitride (GaN) technologies to stay ahead of competition.
3 Trends Influencing the Prospects of the Semiconductors - RF Industry
Accelerated Deployment of 5G is a Tailwind: Rapid implementation of 5G networking infrastructure and robust adoption of cloud computing applications hold promise for the wireless communication market. Coronavirus crisis-induced work-from-home wave has necessitated the need for higher bandwidth and triggered LTE advancements, which are expected to bolster demand for RF power amplifiers. Increasing RF content in the latest 5G smartphones is a key catalyst. Moreover, demand recovery in the smartphone market is likely to aid the prospects of major industry players. 5G smartphone shipments are projected to account for more than 60% of global volume in 2022, per IDC estimates.
Innovation is Opening Up New Business Avenues: Rapid proliferation of IoT, wearables, drones, VR/AR devices, autonomous cars, and ADAS is expected to drive demand for RF semiconductor products beyond smartphone devices, which favors industry prospects. Notably, RF Semiconductors are setting the pace for technology modernization, consequently digitizing aspects like connectivity, healthcare, transport, defense, among others. Diversified utilization of RF Semiconductor products bodes well for the industry players. Moreover, evolution of semiconductor manufacturing processes from 10 nanometer (nm) to 7 nm and even 5 nm and 3 nm technology is anticipated to bolster the industry’s prospects. Further, the roll out of new bands and band combinations has led to considerable design challenges for OEM smartphone manufacturers. The industry participants are looking to address these challenges with a robust range of antenna-plexers portfolio utilizing BAW technology.
Coronavirus Crisis-Induced Macroeconomic Weakness to Hinder Prospects: The industry players are reeling under the impact of the coronavirus crisis-induced macroeconomic woes. The business impacts stemming from supply-chain disruptions raise concerns regarding the industry’s prospects, at least in the near term. Although vaccination efforts have triggered the gradual reopening of economies in several parts of the world, production delays remain an overhang. Moreover, the ongoing Russia-Ukraine conflict and fresh COVID-induced lockdowns in China increase uncertainty. Markedly, the industry players generate a significant portion of their revenues from China.
Zacks Industry Rank Indicates Solid Near-Term Prospects
The Zacks Semiconductors - Radio Frequency Industry is housed within the broader Zacks Computer and Technology sector. It carries a Zacks Industry Rank #107, which places it at the top 42% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bullish near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry’s position in the top 50% of the Zacks-ranked industries is a result of positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are optimistic about this group’s earnings growth potential. The industry’s earnings estimate for 2022 has moved up 16.7% since Apr 30, 2021.
Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Lags S&P 500 & Sector
The Zacks Semiconductors - Radio Frequency Industry has underperformed the S&P 500 and its sector over the past year. The industry has declined 39.7% over this period against the S&P 500’s rally of 5.7% and the broader sector’s drop of 10.7%.
One Year Price Performance
Industry's Current Valuation
On the basis of forward 12-month price-to-earnings ratio (P/E), which is a commonly used multiple for valuing Semiconductors - Radio Frequency stocks, the industry is currently trading at 11.03X, lower than the S&P 500’s 19.09X and the sector’s 22.45X.
Over the past five years, the industry has traded as high as 23.90X and as low as 15.32X, with the median being at 18.83X, as the charts below show.
Growing demand for wireless carrier infrastructure builds for 5G is a tailwind for RF Industries. Increased spending from carriers deploying 5G bodes well for RFIL.
RF Industries’ shares have dropped 14.7% year to date.
The Zacks Consensus Estimate for RF Industries’ fiscal 2022 bottom line is pegged at 43 cents per share, unchanged over the past month, suggesting a 37.7% decline over fiscal 2021.
Price and Consensus: RFIL
Akoustis Technologies: This Zacks Rank #3 (Hold) company is benefiting from an expanding WiFi customer base. Akoustis is riding on continued design wins in WiFi and 5G Mobile. Akoustis currently has 13 design wins - eight in Wi-Fi 6E and five in Wi-Fi 6. The RFM Integrated Device acquisition diversifies the revenue base.
Shares of Akoustis have declined 14.6% year to date.
The Zacks Consensus Estimate for Akoustis’ fiscal 2022 loss has stayed at 90 cents per share over the past 30 days. The company reported a loss of 78 cents per share in fiscal 2021.
Price and Consensus: AKTS
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2 Radio Frequency Stocks to Watch in a Promising Industry
The Zacks Semiconductors - Radio Frequency industry is riding on rapid deployment of 5G networking, which is gaining importance from the rapid proliferation of Internet of Things (IoT), Advanced Driver Assistance Systems (ADAS) and Augmented Reality/Virtual Reality (AR/VR) devices. The democratization of 5G smartphones is a tailwind for the industry players. This has bolstered demand for radio-frequency semiconductor solutions, which enhances the prospects of prominent industry players like Akoustis Technologies (AKTS - Free Report) and RF Industries (RFIL - Free Report) . Nevertheless, lingering impacts of the coronavirus pandemic-led business volatility remain a concern. Moreover, the ongoing Russia-Ukraine conflict and fresh COVID-induced lockdowns in China increase uncertainty.
Industry Description
The Zacks Semiconductors - Radio Frequency Industry comprises companies that provide Radio Frequency (RF) solutions, Front-end Modules (FEMs), low-noise amplifiers, diodes, multi-chip modules (MMICs), optical components, surface acoustic wave (SAW), bulk acoustic wave (BAW) technology-based antenna-plexers, and film bulk acoustic resonator (FBAR) filters to enable smartphone devices to function more efficiently in congested RF spectrum. They serve a wide array of industries with their solutions finding ample application in 5G and smartphone equipment, aerospace and defense, optical networks, cellular base stations, automotive and smart home applications. Most of these companies utilize robust wafer fabrication technologies as well as ZigBee, Bluetooth Low Energy (BLE), Thread, silicon germanium and Gallium Nitride (GaN) technologies to stay ahead of competition.
3 Trends Influencing the Prospects of the Semiconductors - RF Industry
Accelerated Deployment of 5G is a Tailwind: Rapid implementation of 5G networking infrastructure and robust adoption of cloud computing applications hold promise for the wireless communication market. Coronavirus crisis-induced work-from-home wave has necessitated the need for higher bandwidth and triggered LTE advancements, which are expected to bolster demand for RF power amplifiers. Increasing RF content in the latest 5G smartphones is a key catalyst. Moreover, demand recovery in the smartphone market is likely to aid the prospects of major industry players. 5G smartphone shipments are projected to account for more than 60% of global volume in 2022, per IDC estimates.
Innovation is Opening Up New Business Avenues: Rapid proliferation of IoT, wearables, drones, VR/AR devices, autonomous cars, and ADAS is expected to drive demand for RF semiconductor products beyond smartphone devices, which favors industry prospects. Notably, RF Semiconductors are setting the pace for technology modernization, consequently digitizing aspects like connectivity, healthcare, transport, defense, among others. Diversified utilization of RF Semiconductor products bodes well for the industry players. Moreover, evolution of semiconductor manufacturing processes from 10 nanometer (nm) to 7 nm and even 5 nm and 3 nm technology is anticipated to bolster the industry’s prospects. Further, the roll out of new bands and band combinations has led to considerable design challenges for OEM smartphone manufacturers. The industry participants are looking to address these challenges with a robust range of antenna-plexers portfolio utilizing BAW technology.
Coronavirus Crisis-Induced Macroeconomic Weakness to Hinder Prospects: The industry players are reeling under the impact of the coronavirus crisis-induced macroeconomic woes. The business impacts stemming from supply-chain disruptions raise concerns regarding the industry’s prospects, at least in the near term. Although vaccination efforts have triggered the gradual reopening of economies in several parts of the world, production delays remain an overhang. Moreover, the ongoing Russia-Ukraine conflict and fresh COVID-induced lockdowns in China increase uncertainty. Markedly, the industry players generate a significant portion of their revenues from China.
Zacks Industry Rank Indicates Solid Near-Term Prospects
The Zacks Semiconductors - Radio Frequency Industry is housed within the broader Zacks Computer and Technology sector. It carries a Zacks Industry Rank #107, which places it at the top 42% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bullish near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry’s position in the top 50% of the Zacks-ranked industries is a result of positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are optimistic about this group’s earnings growth potential. The industry’s earnings estimate for 2022 has moved up 16.7% since Apr 30, 2021.
Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Lags S&P 500 & Sector
The Zacks Semiconductors - Radio Frequency Industry has underperformed the S&P 500 and its sector over the past year. The industry has declined 39.7% over this period against the S&P 500’s rally of 5.7% and the broader sector’s drop of 10.7%.
One Year Price Performance
Industry's Current Valuation
On the basis of forward 12-month price-to-earnings ratio (P/E), which is a commonly used multiple for valuing Semiconductors - Radio Frequency stocks, the industry is currently trading at 11.03X, lower than the S&P 500’s 19.09X and the sector’s 22.45X.
Over the past five years, the industry has traded as high as 23.90X and as low as 15.32X, with the median being at 18.83X, as the charts below show.
Forward 12-Month P/E Ratio
2 Radio Frequency Stocks to Keep a Close Eye on
RF Industries: This Zacks Rank #2 (Buy) company is riding on strong demand for its Optiflex hybrid fiber solutions. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Growing demand for wireless carrier infrastructure builds for 5G is a tailwind for RF Industries. Increased spending from carriers deploying 5G bodes well for RFIL.
RF Industries’ shares have dropped 14.7% year to date.
The Zacks Consensus Estimate for RF Industries’ fiscal 2022 bottom line is pegged at 43 cents per share, unchanged over the past month, suggesting a 37.7% decline over fiscal 2021.
Price and Consensus: RFIL
Akoustis Technologies: This Zacks Rank #3 (Hold) company is benefiting from an expanding WiFi customer base. Akoustis is riding on continued design wins in WiFi and 5G Mobile. Akoustis currently has 13 design wins - eight in Wi-Fi 6E and five in Wi-Fi 6. The RFM Integrated Device acquisition diversifies the revenue base.
Shares of Akoustis have declined 14.6% year to date.
The Zacks Consensus Estimate for Akoustis’ fiscal 2022 loss has stayed at 90 cents per share over the past 30 days. The company reported a loss of 78 cents per share in fiscal 2021.
Price and Consensus: AKTS
