NEW YORK, Nov. 22, 2021 /PRNewswire/ -- Argus Research, an
independent investment research firm, has launched Equity Research
Report coverage on Focus Universal Inc. (NasdaqCM: FCUV)
Click Here to view full Argus Equity Research Report.
COMPANY HIGHLIGHTS: Excerpts (as conveyed by
Argus Analyst Steve Silver) include:
- Focus Universal: Connecting the Internet of Things
- Focus Universal's technologies were created to simplify the
design and production process for the Internet of Things (IoT)
industry, the network created by billions of internet-compatible
devices.
- The growth of IoT has been limited by interoperability
challenges among devices with different technical specifications
and functional capabilities.
- The company's Universal Smart Instrumentation Platform
addresses these interoperability challenges and facilitates the
sharing of up to 90% of common software and hardware among devices.
It also helps product developers to lower costs, shorten design and
development cycles, and reduce natural resource consumption.
- The company is currently selling niche products to customers in
the horticulture industry through Hydrofarm, the largest U.S.
horticultural distributor, with a roughly 50% market share. It is
also preparing to enter the smart home market.
- Focus Universal recently raised more than $11 million through an equity offering and
uplisted its stock on the Nasdaq. We expect this listing to boost
investor interest in the company and facilitate access to
additional outside capital.
- Based on our valuation analysis, we arrive at a fair value
estimate for FCUV of $15 per share,
well above current levels near $8.
INVESTMENT THESIS excerpts (Click Here to
view full Argus Equity Research Report):
Founded in 2012, Los
Angeles-based Focus Universal has developed proprietary
technologies designed to simplify the design and production process
of the Internet of Things (IoT). The company's focus on
solving IoT "pain points" has resulted in three foundational
patents and 13 provisional patents covering a broad range of
technologies. Its key products are:
- Universal Smart Instrumentation Platform (USIP), which provides
a common hardware and software foundation for the electronic design
and production of IoT applications.
- Ultra Narrowband Power Line Communication, which enables the
transmission of data among IoT devices over an existing power
grid.
- User Interface Machine Auto Generation Platform (UIMAD), which
provides a cross-platform middle layer between programing languages
and designated application software.
- 5G++ (Ultra Narrowband Wireless Communication), which expands
5G coverage, reduces energy consumption, and provides substantial
cost savings over existing 5G technologies.
- DoC (Device-on-a-Chip), which leverages the company's USIP
technology in a single DoC chip able to carry out all device
functions.
The company's technologies are designed to improve the
functionality and efficiency of the Internet of Things (IoT), the
network created by billions of internet-compatible devices. Gartner
recently estimated that more than 20 billion IoT devices were in
use globally at the end of 2020, and MarketsAndMarkets expects the
overall IoT market to reach $561
billion by 2022. In our view, the market could double
over the remainder of the decade.
The growth of IoT has been limited by interoperability
challenges among devices with different technical specifications
and functional capabilities. IoT functionality may also be
slowed by interference from radio signals and radiation.
The company's Universal Smart Instrumentation Platform (USIP) is
designed to address these interoperability challenges and to
facilitate the sharing of data among devices. It helps product
developers to lower costs, shorten design and development
cycles, and reduce natural resource consumption.
USIP integrates cloud technology, wired and wireless
communications, software programming, instrumentation, artificial
intelligence, and sensor networks into a single platform that makes
circuit design faster and cheaper than it is when end users build
network components from scratch.
USIP uses a computer or mobile device as a display and control,
and communicates with sensors, instruments, probes, or controllers
manufactured by different vendors without requiring the user to
understand their unique characteristics. The portable version of
the platform, accessible through a universal handheld device called
a Ubiquitor, uses a smartphone to coordinate the control of
different devices. In our view, the Ubiquitor is well positioned to
become the industry standard as the efficiency of IoT networks
improves. We expect Focus Universal to ramp up production of these
devices next year, which should accelerate revenue growth.
The company is currently selling niche products to customers in
the horticulture industry through Hydrofarm, the largest U.S.
horticultural distributor, with a roughly 50% market share. We
expect the company to leverage its relationship with Hydrofarm to
penetrate the horticulture market further, which has annual sales
of more than $10 billion. Using the
company's Ubiquitor device, horticultural producers are able to
monitor sensors and other instruments that regulate plant growing
conditions, including temperature, humidity, light, pH, and
CO2.
The company sees a second opportunity for the USIP in the global
smart home market, which MarketsAndMarkets expects to grow from
$78 billion in 2020 to $135 billion by 2025. Smart home automation
enables the remote control of lighting, temperature, alarm systems,
and household appliances. Current smart home products are typically
able to control only a single dedicated function, while the USIP
creates a control hub that can manage multiple functions at a lower
overall cost.
In March 2019, Focus Universal
acquired AVX, an IoT installation and management company that will
provide IoT services to homeowners. Focus and AVX will launch this
service next year. We expect the low cost of the products and
service and AVX's experience with IoT installation to generate
substantial consumer interest. Over the next several years, we also
expect the company to expand into the medical/healthcare,
commercial/industrial, and military verticals, among others.
Over the long term, we expect manufacturers to use the company's
technology to reduce hardware and software development costs for
IoT devices. In addition, we believe that Focus has opportunities
to license its technology, which would provide a new revenue stream
while also allowing the company to maintain control over its
intellectual property.
Focus Universal has also developed a proprietary
ultra-narrowband technology that increases the speed and improves
the reliability of data transmission over existing power cables.
These cables have historically transmitted data at slow speeds,
provided limited coverage, and been susceptible to electrical noise
and other types of interference. The company believes that it has
developed a solution with superior noise rejection that provides a
scalable, cost-effective solution for connecting devices.
Its technology converts wall sockets into access points, thus
providing greater reliability and security than wireless networks,
which can be more easily accessed by unauthorized users or hampered
by walls, floors, and other muting structures. We think that Focus
Universal could launch this technology commercially in 2-3
years.
Focus Universal is also developing 5G++, an ultra-narrowband
wireless technology that will help wireless providers overcome the
current limitations of 5G. Despite its increased speed and
reliability, 5G is limited by a narrow communication range,
higher energy consumption than 4G, and infrastructure costs that
are slowing its global rollout. Focus Universal's 5G++ technology
is designed to expand coverage to an area 3- to 10-times larger
than that provided by standard 5G, and thus to reduce the need for
(and the cost of) new infrastructure. The company's
ultra-narrowband technology will also impact energy consumption by
up to 6,000x less than current 5G— an important issue as 5G base
stations typically use at least twice as much power as 4G stations.
This could provide significant cost savings for network operators
and an attractive licensing opportunity for Focus Universal.
Similarly, in the software space, Focus Universal has developed
a "user interface machine auto generation platform" (UIMAD). The
platform simplifies software development for IoT devices by
providing a common middle layer between programming languages and
application software. The middle layer includes 90% of the
necessary coding, allowing software engineers to program an
application with relatively few lines of additional code. The
technology is also able to convert thousands of lines of code into
a micro-code saved to a sensor module. When these modules are
plugged into a USIP, the saved user interface specification codes
are sent to the platform and to a universal display, such as a
computer or a smartphone.
The UIMAD platform resembles low-code or no-code programming in
that it reduces the need for traditional hand coding and thus helps
to accelerate application development. However, due to integration
challenges, the absence of customization, and security risks, major
software companies such as Microsoft, IBM, Oracle, SAP and
Salesforce have not developed their own UIMAD platforms. As such,
we believe that Focus Universal's UIMAD could attract licensing
interest.
Addressing the limits of Moore's Law, Focus Universal has also
developed "device-on-a-chip" technology (DoC) that combines
integrated circuit components in a single integrated chip (IC). A
DoC works as a single component but is capable of handling entire
device functions. In contrast to integrated chips, which focus on
hardware-hardware integration and limit integration to the
component level, DoC includes both hardware and software, thus
strengthening performance. DoC uses less power, increases
reliability, and offers a smaller overall package with fewer
required interconnections between components. As a result, we
believe that DoC technology is better suited than traditional IC
for IoT devices that are increasingly custom-designed and
manufactured.
About Focus Universal Inc. (NasdaqCM: FCUV)
www.focusuniversal.com
Focus Universal Inc. (NASDAQ:FCUV) is a provider of patented
hardware and software design technologies for Internet of Things
(IoT) and 5G. The company has developed four disruptive patented
technologies to solve the major problems facing hardware design,
hardware production, software design and network communication
facing both industries today. These technologies combined have the
potential to reduce costs, product development timelines and energy
usage, while increasing range, speed, efficiency, and security for
these industries.
For more information please contact:
Dr. Desheng
Wang
CEO
ir@focusuniversal.com
About Argus Research Corp.
Headquartered in NYC, Argus Research (www.argusresearch.com) is
a leading independent equity research firm (est. 1934) ̶
providing fundamental and quantitative research coverage on
more than 1,600 companies across all 11 sectors of the S&P 500,
as well as macroeconomic and equity market forecasts, thematic
research, model portfolios and pre-IPO research. In addition,
Argus has recently committed to
providing a sponsored research solution for small & mid-cap
companies seeking coverage. Argus's Equity Research & earnings
estimates are available on major research / earnings estimate
aggregator platforms, including Bloomberg, Thomson Reuters, Factset
and S&P Global.
For more Information please contact:
Darrell Stone
646-747-5438
dstone@argusresearch.com
Argus Research Co. has received a flat fee from the company
discussed in this report as part of a Sponsored Research agreement
between Argus and the company. No
part of Argus Research's compensation is directly or indirectly
related to the content of this assessment or to other opinions
expressed in this report. Please refer to the full Argus report and the disclaimer for complete
disclosures.
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