Mark Watson-Mitchell asks what is Elon Musk going to do with Filtronic?

Mark Watson-Mitchell
Feb 3
7 min read

03.02.2025

With Donald Trump’s return to the US Presidency, the question remains whether he will help to push Elon Musk’s already powerful presence in the world of commerce?

As a heavy contributor to Trump’s election funding, it is said that Musk could end up gaining considerable power as he progresses in his business interests on a global basis.

Born in South Africa in 1971, Musk moved to North America in 1988, later studying in Canada and the U.S. and eventually acquiring U.S. citizenship in 2002.

We all know about his control of the Tesla electric vehicle enterprise, that he set up in 2003 and today is the world’s biggest automotive business.

Tesla not only sells its own electric cars but also supplies electric powertrains for electric models by Smart, Mercedes and Toyota.

But did you know that he co-founded PayPal, the global financial technology company, in 1998 before merging it with his former company X.com two years later.

We know that he controls the social media site that promotes free speech, formerly known as Twitter, which was rebranded two years ago by Musk as X.

He also has the 2023 established artificial intelligence company xAI, which is separate from X.

In 2015 Musk founded OpenAI, the non-profit research and development company that today is one of the world’s leading AI research labs.

In 2006 he co-founded SolarCity, which became the second-largest provider of solar power systems in the U.S. before being acquired by Tesla in 2016.

Way back in 2016, Elon Musk set up The Boring Company, with the purpose of handling projects for intra-city transit systems to help to solve traffic challenges and enable point-to-point transportation – one of its notable involvements was at the Las Vegas Convention Centre where it created two parallel tunnels, each 1.7 miles long, enabling Tesla vehicles to carry passengers across the centre.

He is the owner of Neuralink Corporation, which is developing brain implants able to communicate with computers and phones, helping people with paralysis to regain independence.

In 2002 Musk created Space Exploration Technologies, with the idea of making space launch rockets re-usable, thereby reducing the cost of launches by a factor of 10.

SpaceX – is rocket science but on ludicrous mode

SpaceX was founded in 2002 to expand access to outer space, not just for government or traditional satellite operators, but for new participants around the globe.

Today, it is flying at an unprecedented pace as the world’s most active launch services provider.

SpaceX is safely and reliably launching astronauts, satellites, and other payloads on missions benefiting life on Earth and preparing humanity for the ultimate goal – which is to explore other planets in the solar system and beyond.

Starship is paramount to making that sci-fi future, it is the largest and most powerful space transportation system ever developed, and its fully and rapidly reusable design will exponentially increase humanity’s ability to access and utilise outer space.

Full reusability has been an elusive goal throughout the history of spaceflight, piling innumerable technical challenges on what is already the most difficult engineering pursuit in human existence.

Every flight of Starship has made tremendous progress and accomplished increasingly difficult test objectives, making the entire system more capable and more reliable.

Its approach of putting flight hardware in the flight environment as often as possible maximises the pace at which we can learn recursively and operationalise the system.

This is the same approach that unlocked reuse on the group’s Falcon fleet of rockets and made SpaceX the leading launch provider in the world today.

To do this and do it rapidly enough to meet commitments to national priorities like NASA’s Artemis programme, Starships need to fly.

SpaceX is the only private company to return a spacecraft from low-Earth orbit and take humans to and from the International Space Station.

The company, which believes in the power of a reusable rocket, is valued at over $400bn, and is one of the most valuable private companies in the world.

SpaceX has declared that it is committed to including diverse suppliers in its sourcing process, which enhances its ability to provide the most reliable, high-quality, and cost-effective products and services.

“While SpaceX develops and manufactures its technologies and products in-house, oftentimes it can leverage specialised, small, nimble, or local suppliers that enable it to achieve its goals.”

So it is well worth noting that Filtronic (LON:FTC), a supplier to SpaceX, last April issued warrants to enable SpaceX to subscribe for up to 10% in the FTC equity, based upon FTC receiving orders worth $60m (£48m) from the customer.

The big question is - for how long will SpaceX, which has ambitions to be the world leader in rocket technology, be happy to control only 10% of the Filtronic equity, will it want a great deal more, if not control?

The Sedgefield, County Durham-based group is an expert in the design, manufacture, and testing of high-performance radio frequency components.

It designs and manufactures products that transmit, receive and condition radio waves, particularly at microwave and mmWave frequencies.

Mission-critical communication networks depend on its systems and components.

The group’s markets are: Telecommunications infrastructure (4G and 5G); Critical communications; Space; Aerospace and defence; Trackside to train; and Test and measurement.

In the last year or so it has won several major orders, including contracts with SpaceX, as it continues to support the deployment of the Starlink constellation with E-band technology.

Technology Director comments

Commenting upon the group’s strategy to double its manufacturing capacity at its NETPark, County Durham, Director Tudor Williams stated that:

“When I started three and half years ago, we were mainly a telecoms and defence company, working on backhaul for 5G.

So, we were doing quite advanced millimetre wave for telecoms.

But that’s flipped on its head now and we’ve become mainly a space company and that’s the biggest part of the company now.

We’ve always had to be at the leading edge of the next frequency band so we’ve stepped up and up in frequency as we’ve gone on.

The latest is e-band, which is 71 gigahertz to 81 gigahertz - a very high-frequency design that is hard to manufacture.

It requires very high tolerance manufacturing, and it’s very hard to do at any kind of volume.

Realistically, we’re one of only a few companies in the world that can do that in the volumes that we can, and with the high yield.

We’ve learned from our telecoms background.”

Interim Trading And Subsequent Update

On Monday 16th December last year, the group issued a Trading Update ahead of reporting its Interim Results for the six months to end-November 2024.

The company reported that it expects to report a strong set of results for the period with significant growth in revenue and profits.

Customer demand remained robust with the second-half benefitting from pull-forward of customer orders.

Consequently, the Board now expects to deliver stronger results for the full year than current market expectations.

CEO Nat Edington stated that:

"We are delighted with the continued momentum that we have achieved and look forward to focussing on delivering these increased expectations over the remainder of the year."

Less than a month later, on Monday 13th January, the group declared that its order intake for delivery in the current financial year is at a higher rate than anticipated.

Consequently, the Board now expects to deliver stronger results for the full year than the recently upgraded market expectations.

Brokers View

After the latest Trading Update, analysts Edward Stacey and Kimberley Carstens, at broker Cavendish Capital Markets, increased their estimates for the current year to end-May 2025 to show £48.4m (£25.4m) of revenues, while more than tripling their adjusted pre-tax profits to £11.5m (£3.4m), and with 343% advance in the expected earnings per share to 4.8p (1.4p).

They reckon that the biggest revenue growth driver for Filtronic in FY25 has been its partnership with SpaceX, providing E-band solid-state power amplifiers for the ground stations that link the Starlink low-earth orbit satellite constellation to terrestrial networks.

The analysts had a Target Price of 91.9p for the group’s shares, which has since been left well behind.

They note that the group has a strong growth outlook for FY25 and for the medium term with good visibility on its underlying drivers, including the Starlink partnership.

The brokers value the shares using a medium-term valuation scenario based on £50m of revenue potential.

Space Sector Events

It is well worth noting that in the Space Sector globally there will be a number of events which will help to drive more interest, including the SmallSat Symposium 2025 being held this week from Tuesday 4th to Thursday 6th February.

Later this month in Singapore there is the 2025 Global Space Technology Convention and Exhibition, followed in early April by the 40th Space Symposium.

These three events alone will highlight even further the potential and prospects for Filtronic and its important Space Sector customers.

My View

The shares of the Filtronic group will, undoubtedly, move up and down this year, not just reflecting overall market movements but also the strength to be shown in the burgeoning Space Sector.

That sector has transformed the group over the last couple of years, and we already know that its new facilities will handle a significant advance in its production.

Tomorrow morning, the group will be announcing its Interim Results to end-November last year.

It will not be just how the numbers show through, but instead, it will be about the content of the accompanying Management comments and any subsequent broker updates.

The group’s shares this morning are trading at 98p, valuing it at £215m.

I see the shares, backing and filling for the next few months, but overall, I expect them to make an even greater upward price move over the 2025 calendar year.

Stay tightly strapped in but be prepared to buy cheap stock when the price falls back, as it inevitably will do as profit-taking occurs.