Sunday, April 23, 2017

Monolithic Power On Track To Deliver Exceptional Growth

With healthy margins, very strong relative growth prospects, and large addressable markets, Monolithic Power (NASDAQ:MPWR) checks a lot of the boxes that semiconductor investors like to see. That goes at least some way toward explaining why the shares have been so strong over the last one, three, and five years relative to the semiconductor industry and other power management rivals like Texas Instruments (NYSE:TXN), Maxim (NASDAQ:MXIM), and Infineon (OTCQX:IFNNY).

I like the prospects for the company to gain share in the growing auto semiconductor market, not to mention leveraging new opportunities like brushless motor control and more established opportunities like home appliances and servers. The question is how much an investor is willing to pay for that. It appears to me that the shares are already pricing in long-term revenue growth in the high-teens to low 20%'s, and it's tough to see a lot of incremental upside unless you believe Monolithic is going to significantly outperform expectations and that investors will continue to pay premiums for semiconductor stocks above past norms.

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Monolithic Power On Track To Deliver Exceptional Growth

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