Resonant Stock: Bullish Outlook for This 5G Penny Stock
If you’re looking for an overlooked 5G stock with tremendous upside, you might want to put Resonant Inc (NASDAQ:RESN) on your radar. After roaring into 2021 and hitting a 52-week high of $8.33 on February 9, RESN stock has retreated and is currently trading near a tested support level of $2.70.
Despite the big pullback, Resonant stock is still up by 8.8% year-to-date and 10.5% year-over-year. Those are tiny gains for a 5G penny stock that Wall Street thinks will soar over the coming quarters.
Of the analysts providing a 12-month price target for RESN stock, their average estimate is $7.56, with a high estimate of $12.00. That represents upside potential of 162% and 316%, respectively. Even their low estimate of $6.00 represents upside potential of 108%.
Why the optimism?
Resonant reported record 2020 revenue, with technology traction growing within the smartphone, Wi-Fi, and automotive markets. (Source: “Resonant Inc. Reports Fourth Quarter And Full Year 2020 Financial Results,” Resonant Inc, March 15, 2021.)
Management also noted that the company’s flagship radio frequency (RF) filter technology is moving closer to mass-scale commercialization for 5G mobile networks.
The company said it expects to see its unit shipping volumes with existing customers ramp up throughout 2021. Resonant also expects to ink new agreements that include significant prepaid royalties, which will provide the company with a more reliable revenue stream.
That’s exactly what happened during the first quarter, and the company’s second-quarter numbers are expected to be significantly higher.
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RESN Stock Overview
Resonant Inc creates filter designs for RF front-ends for the mobile device industry. (Source: “The Technology Enabling the Transition to 5G In Europe,” Resonant Inc, July 22, 201.)
RF filters are inside many wireless devices. They ensure that only the “right” frequencies (signals) pass through to a particular device, while also filtering out unwanted signals.
This is vital for 5G because it requires higher frequencies, higher data transmission, and faster timing. In fact, because of the high frequency, extreme speeds, and design difficulties, some 5G phones could have more than 100 filters.
Resonant Inc’s filters will also help unlock new applications in extended reality, connected cars, smart homes, smart cities, and the Internet of Things (IoT).
In 2020, the company signed a partnership with the largest RF filter manufacturer in the world. The deal consisted of a strategic investment and a licensing agreement to design 5G RF filters with Resonant’s flagship “XBAR” technology.
Resonant Inc is the only company in the world that has provided RF filter solutions that meet the increasingly complex RF performance needs for mobile and non-mobile applications—without the need for material doping or ancillary components.
The company’s “Infinite Synthesized Network” (ISN) platform and XBAR solutions have uniquely positioned it to capitalize on the rapidly growing $9.0-billion RF filter market.
To date, the company’s customers have cumulatively shipped more than 61 million RF filters designed using Resonant’s technology, several of which continue to make their way into Tier-1 smartphones, as well as the Wi-Fi and automotive markets.
Resonant Inc continues to make progress with its 4G RF filter solutions. In 2020, the company signed a multi-year licensing agreement with a major Asian filter foundry partner. That deal includes both prepaid revenues and royalties.
The company has completed the designs of seven 4G RF filters covering multiple bands. They collectively represent a worldwide addressable market of approximately $1.6 billion.
Resonant’s XBAR technology is ideally suited for high-frequency 5-GHz and 6-GHz Wi-Fi applications, such as Wi-Fi 6E, which is a rapidly emerging, billion-dollar segment.
The number of Wi-Fi 6 hotspots is projected to grow 13-fold from 2020 to 2023. This exploding market will require efficient RF filter solutions in the Wi-Fi market for mobile, customer-premises equipment (CPE), and infrastructure applications.
With a strong intellectual property (IP) portfolio of more than 330 patents filed or issued (more than 175 of which are focused on 5G technology), Resonant has plenty of room to grow.
Record Q1 2021 Results
In May, Resonant announced that its first-quarter revenue came in at $600,000, which was in line with previous guidance. During the first quarter of 2020, the company reported revenue of $500,000. (Source: “Resonant Inc. Reports First Quarter 2021 Financial Results,” Resonant Inc, May 12, 2021.)
It ended the first quarter of 2021 with deferred revenue of $1.3 million.
The company reported a first-quarter net loss of $8.8 million, or a loss of $0.15 per share, compared to a net loss of $8.0 million, or a loss of $0.18 per share, in the same quarter a year ago.
Resonant Inc reported an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss of $6.4 million, or $0.11 per share. That’s compared to an EBITDA loss of $6.4 million, or $0.15 per share, in the same period last year.
During the quarter, Resonant Inc shipped a record 8.6 million RF filters, representing a 437% year-over-year increase and a 25% sequential increase. The company also shipped non-mobile XBAR Wi-Fi 5 and 6E devices.
Also during the first quarter, Resonant signed an extension to its licensing agreement with an existing Tier-1 Chinese foundry partner, collecting prepaid royalty revenues for multiple RF filter designs to address the Chinese mobile handset market.
With a market cap of just $174.0 million, Resonant stock is a small 5G penny stock. But that might not be true for long.
Resonant Inc has been increasing its shipment volumes and moving toward the high-volume manufacturing of its XBAR technology.
The company’s agreement with the world’s largest RF filter manufacturer is advancing, with Resonant having successfully completed performance and reliability demonstrations.
Supported by its robust IP portfolio, Resonant believes it’s positioning itself to be competitive with some of the largest players in its industry.