MaxLinear (MXL) has had its operational challenges over the years, but with massive MIMO transceivers going into production, wireless backhaul picking up, and a long-awaited ramp with Amazon (AMZN) for its 400G PAM-4 on the way, better days could be on the way. It’s not as though the stock has been languishing either, with the shares up about 8% since my last update, outperforming the basically flat performance of the SOX since then.
I still don’t love the valuation here, but that’s a sector call/issue more than a MaxLinear-specific issue. I do still worry that Street and investor expectations for the PAM-4 business are too high (and that the company will struggle against Marvell (MRVL) and Broadcom (AVGO)), and the supply constraints that are limiting upside today could persist. I do like the connected home business, though, and ongoing momentum in 5G wireless would be a big help.
All told, I’m pretty lukewarm on MaxLinear. I think stocks like Broadcom (which I own), Renesas (OTCPK:RNECY) and STMicro (STM) offer better valuations, but MaxLinear could surprise on growth (in either direction), and the modeling upside for MaxLinear in a bull scenario is higher. If you feel like taking more risk in the pursuit of growth, this is a name to consider (as would Lattice (LSCC) and Silicon Labs (SLAB)), but it’s likely a tougher sale with the GARP/value crowd.
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