Alphawave IP Group PLC’s (LON:AWE) share price could potentially double thanks to its “unique position within the rapidly expanding data centre space”, according to analysts at Barclays.
In a note on Wednesday initiating coverage of the computer chip maker with an ‘overweight’ rating and 475p target price, the bank said the growth of the sector was “driving sales and profit growth faster” than anything else in their coverage, adding that they expected the firm to “gain share within this growth market as its chipmaker customers shift from proprietary to Alphawave designs”.
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“We forecast Alphawave to grow revenue organically by 62% [compound annual growth rate from] 2020-25, with EBITDA margins expanding from c50% to the mid-60%s, thereby delivering 70% CAGR in EBITDA”, Barclays said.
We think such growth warrants a premium valuation, but at current levels it only trades at the low end of peers… We think it reasonable for Alphawave to trade at least at a slight premium to much slower-growing peers”, the bank added.
Barclays said that should all of the company’s growth drivers hit, the share price could “near-double” to 650p.
Shares in Alphawave rose 0.8% to 340.6p in mid-morning trading.