The shares of semiconductor-based power electronics solutions provider Monolithic (MPWR) have declined 6.4% in price over the past month. The stock is now trading below its 50-day moving average. However, we think MPWR is well-positioned to capitalize on the growing semiconductor market, given its solid underlying fundamentals. Also, analysts expect stable earnings growth in the coming months. So, will MPWR’s shares rebound, or will they retreat further? Read on. Monolithic Power Systems, Inc. (NASDAQ:MPWR) in San Jose, Calif., designs, develops, and markets integrated power semiconductor solutions and power delivery architectures for computing and storage, automotive, industrial, communications, and consumer applications markets. MPWR shares have gained 63.8% in price over the past year and 37.5% year-to-date to close its last trading session at $503.41. They are currently trading above their 200-day moving average but below their 50-day moving average. The stock is trading 13.2% below its 52-week high of $580.00, which it hit on November 22. MPWR has slumped 6.4% in price over the past month. Of the seven Wall Street analysts that rated the stock, six have rated it Buy, while one rated it Hold. Its $597.17 12-month median price target indicates a potential 18.6% upside from their last trading price.
The semiconductor industry has experienced robust demand over the past few months. With substantial investments–and as the chip shortage is gradually eases–the Semiconductor Industry Association (SIA) predicts annual global sales to increase 25.6% in 2021 and 8.8% in 2022, exceeding $600 billion in 2022. The anticipated robust demand bodes well for MPWR because the company is well-positioned to capitalize on the growing semiconductor market.
Furthermore, MPWR’s $2.40 annual dividend yields 0.48% at its current share price. On September 15, the company announced its third-quarter dividend of $0.60 per common share, which was to be paid on October 15, 2021. MPWR’s dividend payouts have increased at a 27.9% CAGR over the past three years and a 23.5% CAGR over the past five years.