This Under-The-Radar Global Chip Company Is Set To Rise 50% In Shares

Alphawave Semi, a U.K.-based semiconductor and chip design company, is predicted to rise more than 50% in the next 12 months.

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It was reported on Feb. 20 that the investment bank's equity research team initiated coverage of Alphawave Semi with an "overweight" rating and they expect the share price to rise from £1.60 ($1.92) per share to $2.92 per share. During the trading day on Friday, the price of the stock was £1.05.

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Founded in 1996, Alphawave Semi, formerly Alphawave IP, is a company that designs microchips for routers, fiber optic cables, and other networking devices. The company also develops semiconductors that can accelerate the transfer of data between the CPUs, GPUs, and memory modules of a computer by acting as "accelerators".

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It comes as no surprise that Barclays is confident about the future after making two acquisitions that have transformed the business model of the company.

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One of Alphawave's acquisitions was OpenFive, which gave Alphawave the ability to create custom silicon products using the intellectual property it already has as part of its existing product line.

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Banias Labs, on the other hand, was tasked with expanding Alphawave's patent portfolio and intellectual property rights. As part of the acquisition, "hyper scalers" - a term used to describe cloud computing giants such as Amazon and Microsoft - were also included as clients.

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“Unlike other companies in our coverage, Alphawave has a unique IP position within the rapidly growing data center market, which should drive sales and profit growth at a faster rate than other companies in our coverage because of Alphawave's leading IP position.” It is now a matter of execution that will determine the outcome," stated analysts Simon Coles and Rohan Bahl in a note to clients on February 20.

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Barclays noted that by acquiring these companies, Alphawave is now able to use its own intellectual property in designing chips that can then be produced at a foundry, a move away from its previous business model of collecting royalties for licensing its intellectual property to third parties.

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If Alphawave is able to deliver on its ambitious revenue targets, investment banks believe that shares could potentially be worth up to £2.55-£3.50 based on their estimates - a bullish view giving the stock 233% upside from its current price, a bullish view that puts Alphawave at a potential $2.55-$3.50 price range.