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On Tuesday, Benchmark analyst David Williams revised the price target for MaxLinear (NASDAQ:MXL) shares, lowering it to $20.00 from the previous $28.00, while still maintaining a Buy rating on the stock. Williams cited industry-wide multiple compression as the reason for the price target adjustment but emphasized that MaxLinear remains undervalued. According to the analyst, the stock is trading at approximately a 40% discount compared to its peers. Currently trading at $9.90, the stock has fallen over 54% in the past year, with analyst targets ranging from $12 to $28. InvestingPro analysis confirms the stock appears undervalued based on its proprietary Fair Value model.
Williams acknowledged the current macroeconomic challenges but expressed confidence in MaxLinear’s growth prospects. He pointed out that the company’s growth outlook remains strong, underpinned by stable inventory levels, a rebound in demand, and the introduction of new products. Despite concerns about slowing artificial intelligence investment trends, the potential effects of tariffs, and the SIMO arbitration, Williams believes these issues are overstated. InvestingPro data shows the company maintains a healthy current ratio of 1.77, operating with moderate debt levels, while six analysts have recently revised their earnings estimates upward for the upcoming period.
MaxLinear is considered to be in a strong position to benefit from ongoing artificial intelligence investment and a resurgence in service provider capital expenditures, which are typically less affected by tariffs than consumer markets. Williams highlighted MaxLinear’s diversified product portfolio, which is seen as well-suited to meet the increasing demand for infrastructure and connectivity solutions in data centers, core networks, and edge networks, as AI processing moves closer to users. While revenue declined 48% in the last twelve months, analysts forecast 25% growth for the upcoming fiscal year. For deeper insights into MaxLinear’s growth potential and comprehensive financial analysis, investors can access the detailed Pro Research Report available on InvestingPro.
The analyst was particularly optimistic about MaxLinear’s recent design wins with a second North American telecommunications service provider for a home gateway device, which could provide up to $50 in silicon content per unit. This development is projected to represent an annual customer premises equipment (CPE) revenue opportunity of around $100 million over the next few years.
In light of the current share price, which is under $10, Williams recommends that investors aggressively purchase shares and take advantage of the opportunity to build positions in the company.
In other recent news, MaxLinear, Inc. reported its fourth-quarter 2024 earnings, revealing a revenue increase to $92.2 million, surpassing analysts’ expectations. The company also reported an earnings per share (EPS) of -$0.09, which was better than the forecasted -$0.13. This performance highlights MaxLinear’s strong results in its infrastructure and broadband segments. In addition, Moody’s Ratings downgraded MaxLinear’s corporate family rating to B3 from B1, citing weak EBITDA margins and leverage metrics, although the outlook was changed to stable.
Moody’s noted that MaxLinear’s large cash balance and outsourced manufacturing model are beneficial, and they expect a modest recovery in revenues over the next 12 to 18 months. Meanwhile, MaxLinear announced the commercial availability of its new 1.6T PAM4 DSP technology, named Rushmore, which aims to enhance networking performance within the AI/ML space. This innovation comes amid supply constraints and is set to be showcased at the Optical Fiber Communication conference in 2025. Additionally, Morelink Technology Corporation has launched a new 5G Repeater platform incorporating MaxLinear’s MxL1600 RF transceivers, enhancing energy efficiency for mobile coverage.
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