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Bank of America Securities upgraded Silicon Motion Technology (NASDAQ:SIMO) from Neutral to Buy on Wednesday, raising its price target to $90.00 from $55.00. The stock, currently trading at $71.36 with a market capitalization of $2.32 billion, appears fairly valued according to InvestingPro analysis.
The firm cited three key catalysts for the upgrade, including Silicon Motion’s increasing enterprise solution sales through partnerships with major NAND chipmakers and U.S. Big Tech companies, including NVIDIA (NASDAQ:NVDA).
BofA also highlighted the company’s resilient revenue growth with high gross margins, noting Silicon Motion faces low impact from U.S. tariffs due to strong bargaining power and well-managed foundry sourcing from TSMC.
The upgrade additionally pointed to a potential windfall from Silicon Motion’s ongoing arbitration case against MaxLinear, which could result in over $160 million in break-up fees if Silicon Motion wins the case expected to conclude in late fourth quarter 2025.
Similar to memory chipmakers, BofA believes Silicon Motion could benefit from growing sovereign AI investments through sales of its eSSD controllers and boot-drivers, known as the MonTitan series.
In other recent news, Silicon Motion Technology reported its first-quarter financial results for 2025, revealing a mix of positive and negative outcomes. The company announced quarterly sales of $166 million, a 12% decrease compared to the previous year but still near the upper end of their projected range of $158 to $167 million. This sales figure slightly exceeded the consensus estimate of $163 million. The company’s gross margin held steady at 47%, meeting expectations, while the operating profit margin of 5.9% fell short of the 8.8% consensus prediction, yet surpassed BofA’s estimate of 4.6%. Additionally, the net profit of $19 million exceeded expectations, aided by a tax benefit and non-operating income. BofA Securities analyst Simon Woo adjusted the price target for Silicon Motion to $55.00 from $47.00, maintaining a Neutral stance on the stock. This followed an earlier upgrade from Underperform to Neutral, with a revised price target of $47.00 due to a significant decline in stock value. Woo noted the company’s capability to generate decent operating profit despite potential challenges in the smartphone and PC markets affecting NAND controller sales.
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