Craig-Hallum initiates coverage on Aeluma stock with Buy rating

Investing.com - Craig-Hallum has initiated coverage on Aeluma (NASDAQ:ALMU) with a Buy rating and a price target of $26.00 on Monday. The stock, which has delivered an impressive 410% return over the past year, currently trades at $15.63. According to InvestingPro analysis, the stock is trading above its Fair Value, with 13 additional ProTips available for subscribers.

The research firm highlights Aeluma’s breakthrough in developing compound semiconductor devices on silicon substrates, a feat that has eluded many companies except for recent GaN applications. This innovation could significantly reduce costs compared to traditional compound semiconductors, which are typically 5-10 times more expensive than silicon-based alternatives. The company maintains strong financial health with a current ratio of 32.76, indicating robust liquidity to support its innovative developments.

Aeluma is initially applying its technology to the short-wave infrared (SWIR) imaging market and is approaching commercialization. Craig-Hallum believes this technology could transform applications including facial recognition, defense systems, and enable new use cases in AR/VR that require lower price points.

The firm estimates Aeluma’s serviceable addressable market (SAM) could exceed $3 billion by 2030, with potential for significant growth beyond that timeframe. Mobile devices, aerospace/defense, and optical interconnects are identified as the most likely sources of initial commercial traction.

Craig-Hallum expects concrete evidence of market traction to emerge within the next 3-9 months, potentially serving as strong catalysts for the stock. The firm notes that Aeluma currently has no analyst coverage and describes it as a "little-known story" on the verge of entering multiple large, fast-growing markets. With remarkable revenue growth of 335% in the last twelve months, the company shows promising momentum. For deeper insights into Aeluma’s financial metrics and growth potential, explore InvestingPro’s comprehensive analysis tools.

In other recent news, Aeluma Inc has announced significant developments involving multiple contracts with major U.S. government agencies. The company secured contracts with NASA and the U.S. Navy aimed at advancing its quantum and sensing systems. The NASA contract will support Aeluma’s efforts in commercializing entangled photon sources, while the U.S. Navy contract focuses on developing low size, weight, and power imaging sensors for submarine systems. Additionally, Aeluma has secured a contract worth up to $1.3 million with the U.S. Navy to further develop high-speed photodetectors. These contracts are expected to accelerate the company’s commercialization efforts and strengthen its relationships with government agencies.

In another development, Aeluma announced a new contract with the U.S. Department of Energy to advance low-cost shortwave infrared photodetectors. This initiative aims to enhance commercial viability in sectors like quality inspection and machine vision. The company is collaborating with a major global interconnect manufacturer and a top-tier government prime contractor as part of its strategy. Aeluma’s semiconductor platform combines compound semiconductor performance with mainstream silicon manufacturing, potentially enabling cost-effective solutions across various markets. These contracts align with Aeluma’s commercial roadmap and go-to-market strategy, focusing on high-growth commercial markets.

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