Why The Street Is Buying Adesto

• ROTH Capital Partners is bullish on Adesto Technologies Corp IOTS.
• The firm believes that Adesto will play a large role in IOT expansion.
• ROTH sees Adesto’s products and IP as superior to that of its competition.

In a new report, ROTH Capital Partners analyst Krishna Shankar explains why ROTH just initiated a Buy rating on Adesto Technologies. ROTH believes Adesto’s technology will play a key role in the fledgling Internet-Of-Things (IOT) market.

Market leader
According to Shankar, Adesto is well-positioned to tackle the issue of power consumption in IOT applications. “In our opinion, ultra-low power and application-specific NVM chips and IP will be a key hardware building block for billions of IOT devices in IOT networks,” he explained. The company already has 500 global end customers for its products.

Product advantage
Shankar sees key advantages to Adesto’s major products, such as DataFlash, FusionFlash and Mavriq. “We believe that Adesto’s NVM technology has advantages of lower-power, high-speed, flexible and wide battery operating levels with feature-rich customization capabilities that will likely allow the company to become a leading player in the IOT memory market,” he adds.

Shankar notes that Adesto’s products have been gaining momentum in recent years, and the company has gone from only 32 design wins in 2013 to 115 through Q3 of 2015.

Outlook
ROTH has initiated coverage on Adesto at Buy and set a $10 price target for the stock. The target is based on 2.3x EV/CY16 revenue projections and 11x 2017 EPS estimates of $0.90/share. In addition, Roth projects 20 percent secular earnings growth for the company.

Adesto’s stock surged more than 5.0 percent in Moday’s session, but the $10 price target still represents more than 73 percent upside.

Disclosure: the author holds no position in the stocks mentioned.