Pixelworks Analyst Opts For Conservative Numbers Until More Visibility

Needham analyst Rajvindra Gill maintained Pixelworks Inc PXLW with a Buy and raised the price target from $4 to $4.20.
Pixelworks guided well below expectations. The Q4 results excellently documented mobile-related weakness, and the analyst saw PXLW's report, essentially confirming that 1Q23 will be the bottom.
The company expects mobile conditions to remain challenging as OEM customers reduce excess inventory.
Chinese COVID impacts (shutdowns turned to mass infections) halted production and demand, but management (who is in China now) expects a vital reopening.
The analyst believes the company has managed inventory well and will likely rebound strongly in 2H23.
Pixelwork's TrueCut Motion technology was distributed globally for Avatar: The Way of Water. Importantly, this proves there is a global ecosystem in place capable of supporting cinematic high-frame rate films.
The analyst believes TrueCut is a call option embedded in the shares and was optimistic that high-margin revenue can boost fundamentals by CY25.
Price Action: PXLW shares traded lower by 13.27% at $1.6825 on the last check Friday.