June 06, 2017 - 10:04am EST by
2017 2018
Price: 14.50 EPS 0.45 1.16
Shares Out. (in M): 10 P/E 32 12
Market Cap (in $M): 148 P/FCF 20 8
Net Debt (in $M): -40 EBIT 5 12
TEV (in $M): 108 TEV/EBIT 23.5 9

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Airgain (AIRG) is a technology-driven manufacturer of antennas for a variety of consumer devices.  The company’s antennas go inside WiFi routers and gateways, smart televisions, and Internet-of-Things (IoT) devices.  Airgain also make antennas for femtocells and picocells (smaller cell sites used to increase coverage in a local area), and has recently entered into the LoRa market (a flavor of low power, wide area network used for IoT).  The company’s goal is to make antennas with at least 30% better performance than commodity antennas and it has achieved this goal to date.  The company IPOed in August 2015 in a small offering done by mid-market banks, leaving the company under the radar screen of most investors.  The company currently has only four analysts covering it from smaller shops so most people still don’t know about the name.

The antenna market is highly competitive, with many small players and a number of ODMs who have antenna making capability in-house.  When it comes to premium antennas, however, Airgain stands above the pack.  The company has 69 US patents granted and another 89 pending.  It has over 500 different antenna models and will then customize a particular model to maximize efficiency of the customer’s device.  There are over 195 million devices in the market with Airgain antennas inside.  The company has been growing revenue at a 30% clip and there is ample room for that to continue. 

One of the main drivers backing Airgain’s revenue growth is the increase in number of antennas per device with successive technology standards.  The currently most widely used wireless standard, 802.11n, supports up to four antennas per device.  The newer 802.11ac standard enables much faster wireless access by using up to eight antennas per device.  Use of additional wireless protocols such as ZigBee Pro, Z-Wave, and Bluetooth will drive the number of antennas per device into the 10 to 12 range.  The proliferation of antennas and wireless protocols will also argue for the use of premium antennas that can minimize interference and maximize signal strength.  As Airgain is the premier player in the space, it should gain market share as this transition occurs.


We are assuming that Airgain is able to continuing growing at 30% through 2018, leading to $70 million in revenue in that year.  We feel that a premium, profitable growth story like AIRG should be afforded a 3.0x EV / Revenue multiple resulting in a $24.90 target price or 80% upside from current levels.

I do not hold a position with the issuer such as employment, directorship, or consultancy.
I and/or others I advise hold a material investment in the issuer's securities.


Airgain's operating leverage will strongly assert itself in 2018 and the resulting explosion in profitability will cause investors to take notice of the stock.

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