SPECIAL ALERT – Adding AXT Inc. shares back to the Select List
- We are adding shares of AXT (AXTI) back to the Tematica Investing Select List as part of our Disruptive Technology investing theme. Our price target is $11.
Like the saying says, “To make a mistake is human” and last week I did just that – I made a mistake by saying we were scaling into shares of compound semiconductor substrate company AXT (AXTI). I had forgotten that we had been stopped out of AXTI shares back in late January with a 27% gain. While I could blame it on the crazy week of economic data and earnings reports, the bottom line is I made a mistake.
The silver lining is that as we formally add back AXTI shares to the Tematica Investing Select List, we are doing so at an even better share price – roughly $6.50 vs. the $8.25 price at which we were stopped out. Over the last few weeks of earnings season, we’ve heard a growing number of companies point to the launch of 5G networks and devices in the coming quarters. I expect more confirmation at the upcoming 5G North America conference that will be held May 14-16 in Austin, Tex. Based on the list of speakers for the event, I expect a number of data points surrounding the timing of 5G but also ensuing applications to be had spinning out of the event.
Also, I am hearing more about rising demand for vertical cavity surface emitting lasers (VCSELs for short) that are a crucial light source component for 3D sensors which increasingly being adopted into smartphones and other consumer electronics devices. This should help drive incremental substrate demand for AXT in the back half of 2018 and beyond.
At current levels, the longer-term reward to be had with AXTI shares easily outweighs incremental downside, and this has us adding AXTI shares back to the Tematica Investing Select List with an $11 price target.
