Since entering the junior market, Filtronic has emerged as an all-too-rare Aim success story
Since the middle of 2021, the London Aim small-cap market has dropped 40%, but the results have varied greatly. Numerous initial public offerings (IPOs) from the 2021 vintage are down by at least 80%. However, after soaring 28 times since May 2021, one Aim-listed stock appears to have reached escape velocity.
It's interesting to note that Filtronic (Aim: FTC) is neither a start-up nor a recent initial public offering. Originally specializing in defense industry components in the 1970s, the company swiftly adjusted to capitalize on the mobile phone boom of the 1980s. After a challenging decade during which the telecom, media, and technology bubbles burst, the shares, which had been listed since the mid-1990s, were demoted from the main market to Aim in 2015. The shares dropped more than 99 percent from 7 to just 5p between 2000 and 2015.
Fresh prospects for Filtronic.
Transceivers, amplifiers, and duplexers are a variety of components used in Filtronics products that transmit and receive communication signals. It has an assembly and testing facility in the United States in addition to three design locations in northern England (Manchester, Leeds, and Sedgefield). For its monolithic microwave integrated circuit, which is used in 5G networks worldwide, the company received the Kings Award for Enterprise in Innovation last year. Although this is not a significant source of income, the group's equipment is also utilized in high-altitude platform systems (HAPS) for piloting airships and drones.
However, Richard Staveley of the Rockwood Strategic investment trust, who invested in the company in May 2023 at a price of about 12p per share, believes that space presents a far greater opportunity for shareholders today than terrestrial telecoms.
Filtronic is hoping to gain new satellite clients and develop products for the satellites themselves, in addition to securing contracts to supply ground station components. As the business reaches scale and its current clientele grows, he sees a bright future for the company, which ended May with net cash of about £12 million.
Filtronic contracts are awarded.
Sales have surged in recent years due to a number of significant contract wins. Management started announcing contracts with an unidentified major worldwide supplier of low-earth orbit (LEO) satellites at the beginning of 2023. At 1,200 km, LEO satellites have a much lower latency of 2550 ms for signals that are 1020 times faster than those of conventional geostationary satellites, which are located at 36,000 km.
They can utilize less crowded frequency bands that farther-flung geostationary satellites would not be able to use otherwise. In addition, compared to higher orbits, launches to LEO use smaller rockets and less fuel, making them more economical and accessible. LEO satellites, as opposed to geostationary satellites, function as constellations, which are vast networks of hundreds of individual satellites that orbit the Earth frequently throughout the day in less than two hours.
Additionally, Filtronic was awarded a 3 million order by the European Space Agency in September 2023. It secured a five-year partnership and a 16 million dollar contract with Starlink in April 2024. The fiscal year that concluded in May 2025 saw a more than twofold increase in revenue, reaching 56 million.
It revealed its biggest contract to date in June, a £32.5 million order from SpaceX that will be completed in the year ending May 2026. With a 13 million order in the aerospace and defense sector announced in mid-July, momentum has continued.
Filtronic shares draw interest.
Filtronic issued warrants under the terms of the strategic agreement with SpaceX, enabling SpaceX to purchase up to 10% of its share capital after SpaceX placed £60 million worth of orders. Though it's unclear, SpaceX has not revealed a stake, indicating that it has chosen to sell for an immediate profit rather than hold the shares.
Driehaus Capital, a US asset manager, has disclosed a disclosable stake of slightly more than 3 percent, though. Despite the ongoing outflows from UK active fund managers, international investors are taking notice of Aim success stories.
As of right now, Filtronics' stock is trading on seven May 2025 sales. While not inexpensive, this is a far cry from the stratospheric prices of unlisted space shares. According to reports, SpaceX is being valued at about £400 billion in a funding round, which is slightly less than 30 times its sales.
For the year ending in May 2026, Filtronic's price/earnings ratio is 55 times that of the forecast, and its enterprise value/Ebitda (earnings before interest, taxes, depreciation, and amortization) ratio is 21. Clearly, investors anticipate much higher growth in the future. That may be correct; according to the first-half results, management predicted that seven tonnes of satellites would be launched daily for the next ten years.
However, there are dangers. Last year, eighty-four percent of revenue came from the top three customers. Lumpy orders are likely to occur. Forecasts for the year ending May 2027 have not yet been released by Cavendish Filtronics House Broker. Investor expectations may have exceeded themselves in light of the share-price performance. Nonetheless, Nat Edington, the CEO who was appointed in May of last year, has so far been able to carry out his duties. In any event, it's encouraging to see an Aim business on the rise in a field that appears to have a bright future.
Price of Filtronic shares in pence.
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