Monolithic Power Systems: A Hidden Gem in the Semiconductor Industry
Despite a recent slump, shares of Monolithic Power Systems (MPWR) remain a promising investment opportunity, according to analysts. The semiconductor firm’s stock has taken a hit, plummeting over 30% since its last earnings report in October. However, experts believe this dip is merely a temporary setback, citing the company’s strong growth potential and expanding market of AI-related customers.
A Buying Opportunity Emerges
Deutsche Bank analysts have added Monolithic’s stock to their list of “top picks,” labeling the recent slide a “buying opportunity.” They reiterated their “buy” rating and a $900 price target, citing likely revenue growth and improving margins over the next two years as positive catalysts. This optimism is fueled by Monolithic’s consistent execution, above-industry growth, and diversity of growth drivers.
Third-Quarter Earnings: A Mixed Bag
Monolithic beat earnings estimates in the third quarter, but its forecast of “roughly flat” revenue growth in the fourth quarter sent investors into a panic, causing the stock to plunge 17% in a single day. The company’s shares took another hit in November when a report suggested Nvidia (NVDA) was considering reducing its component purchases from Monolithic for its Blackwell platform.
AI-Related Growth: A Silver Lining
Despite the potential loss of share among Nvidia’s suppliers, Deutsche Bank analysts believe Monolithic will continue to deliver solid AI-related growth as the market of potential customers expands. This growth is expected to be driven by the increasing demand for AI-related technologies, providing a significant boost to Monolithic’s revenue in the coming years.
Analyst Consensus: A Strong Buy
Ten of the 11 analysts tracked by Visible Alpha rate Monolithic’s stock as a “buy,” with one “hold” rating. The average price target of $822.91 is more than 30% above the current market price, indicating that analysts believe the stock will recover most of its lost ground. With its fourth-quarter earnings report scheduled for February 6, investors will be watching closely to see if Monolithic can deliver on its growth promises.
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