Beaten-Down MaxLinear Starting To Look More Interesting

The last year has been a rough one for MaxLinear (NASDAQ:MXL), with the shares down about 46% (underperforming the broader semiconductor market by almost 20%) despite strong growth in the company’s WiFi connectivity business. Not only have investors become more cautious on chip stocks in general, but there are greater concerns now about potentially slowing cable net-adds in 2023 hurting the Broadband business as well as ongoing concerns about the proposed Silicon Motion (SIMO) deal.

Down more than 40% since my last update on the company, the shares are quite a bit more interesting now even with those fears around cable subscriber growth. I’m not particularly positive on the Silicon Motion deal, and I think the company continues to overstate the opportunity in PAM-4, but I think a lot of bullishness has been beaten out of these shares and I think the longer-term potential in home connectivity and 5G is enough to support the shares from here, with any progress in optical interconnect and the Silicon Motion deal constituting upside beyond that.

 

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Beaten-Down MaxLinear Starting To Look More Interesting