Sunday, May 5, 2019

MaxLinear Now Getting Plenty Of Benefit Of The Doubt

It wasn’t so long ago that I was writing pieces on MaxLinear (MXL) with the theme of “just be patient … it won’t always be that bad”. The shares have since enjoyed a great year-to-date run (up around 45%), beating the SOX by over 10% and beating Broadcom (AVGO) by 20%, and also beating Inphi (IPHI) until just a few days ago. Now I feel like the story is switching more towards “whoa, folks … lets not go crazy here.”

I still like MaxLinear’s leverage to 5G and hyperscale data center with its transceivers, power management, and integrated DSP, driver, and TIA PAM4 chips, and I believe next year will see an acceleration into multiple years of double-digit revenue growth and good margin leverage. Moreover, the Connected Home business seems stable and should improve. The obvious “but” is valuation; I can make a bull-case argument that MaxLinear isn’t totally played out, but expectations are definitely much healthier now and the 5G/hyperscale opportunities are by no means overshadowed by the Connected Home troubles now.

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MaxLinear Now Getting Plenty Of Benefit Of The Doubt

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