On Thursday, Monolithic Power Systems (NASDAQ:MPWR) saw its price target increased by Oppenheimer to $900 from the previous $750, while the firm maintained an Outperform rating on the stock. The adjustment comes amid expectations for the company to capture a significant share of the Blackwell stage 1 power market.
Monolithic Power Systems is anticipated to hold over 70% of the H100 stage 2 power segment, despite Renesas and Infineon (OTC:IFNNY) Technologies (IFX) being expected to claim portions of the market in the second half of the year. The company's 48V power solutions, historically supplied to Google (NASDAQ:GOOGL) through Flextronics and Delta, are projected to be directly used in Google's TPUv5 later this year or early next year, which could lead to a substantial increase in average selling price (ASP).
The firm also highlighted the growth of Monolithic Power Systems' modules, which are expected to account for more than 25% of its sales this year, a significant increase from 10% in 2023. This growth is attributed to the higher ASP of modules compared to chips, with modules having a 4x multiplier effect on ASP.
Furthermore, there is a potential for the x86 CPU market to adopt 48V power solutions in the near term, and Intel Corporation (NASDAQ:INTC) is reportedly already collaborating with Monolithic Power Systems on a project in this domain. Management at Monolithic Power Systems has identified vertical power modules as the most efficient solution for power requirements exceeding 700W.
In other recent news, Monolithic Power Systems (MPS) has been the subject of positive attention from analysts and investors alike. The semiconductor company has reported robust first-quarter earnings, with significant year-over-year and sequential growth from the previous quarter. A key driver of this performance is MPS's strong presence in the artificial intelligence (AI) market.
Recent developments indicate a favorable environment for continued growth, particularly in AI applications. Truist Securities, in response to this performance, has increased its price target for MPS from $789 to $799, maintaining a Buy rating for the stock. The firm has also revised its earnings per share estimate for the calendar year 2025 to $17.36, up from the previous $16.44.
Despite some caution regarding visibility into the second half of the year, MPS remains confident in its long-term growth strategy. The company is expanding its product portfolio and global supply chain, with a particular focus on high-end audio markets and automotive revenue.
InvestingPro Insights
Following the recent price target increase by Oppenheimer for Monolithic Power Systems (NASDAQ:MPWR), a closer look at the InvestingPro data and tips could provide additional context for investors considering this stock. Monolithic Power Systems has been a strong performer, with a significant return over the last week, month, three months, and even the last year, as evidenced by price total returns of 7.52%, 16.01%, 15.39%, and 53.42% respectively. These impressive returns may catch the eye of growth-oriented investors.
Moreover, the company's commitment to shareholder returns is notable, with InvestingPro Tips highlighting that MPWR has raised its dividend for six consecutive years and maintained dividend payments for 11 consecutive years. This consistency could be appealing for income-focused investors. Additionally, 13 analysts have revised their earnings upwards for the upcoming period, signaling a positive outlook on the company's financial performance.
Investors should note that the stock is currently trading at a high earnings multiple, with a P/E ratio of 95.14 and an adjusted P/E ratio for the last twelve months as of Q1 2024 at 99.12. While this could suggest a premium valuation, it may also reflect the market's high expectations for the company's future growth. For those interested in a deeper analysis, there are 20 additional InvestingPro Tips available for Monolithic Power Systems at https://www.investing.com/pro/MPWR, providing further insights into the company's financial health and market position.
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