Why MACOM Technology Is A 'Buy': Analyst Upgrades MTSI With $92 Price Target Post-Wolfspeed Acquisition

Benchmark analyst David Williams upgraded MACOM Technology Solutions Holdings Inc. MTSI to Buy from Hold, with a price target of $92.

The analyst is bullish on MTSI acquiring radio frequency business from Wolfspeed Inc WOLF for $125 million.

The analyst expects the company to garner an annualized EPS accretion of about $0.58 post-full integration if gross and operating margins align with existing MTSI business.

This excludes the benefits from the fab facility, which is expected to be generated in two years.

Moreover, the analyst sees further datacenter AI opportunities for MTSI.

Williams believes the MTSI operating discipline and focus on efficiency will boost margin improvement relative to the existing structure. 

Also, the delayed conveyance of the fab should eradicate a large portion of the associated manufacturing cost of goods sold and reduce the magnitude of lift required to meet the 60%+ target.

The analyst expects EPS of $2.70 and revenue of $649.4 million in 2023 and $2.82 and $679.5 million in 2024. 

Price Action: MTSI shares are trading higher by 0.34% at $80.31 on the last check Monday.