Monolithic Power Rides High On NVIDIA Partnership, AI Roadmap, And Pipeline Strength: Analyst

Rosenblatt Securities analyst Hans Mosesmann reiterated a Buy rating on Monolithic Power Systems, Inc. MPWR, raising the price target to $750 from $550.

The analyst increased the price target, foreseeing a cyclical analog with an embedded bottom visible in the first half of 2024. 

The rise is attributed to a substantial power analog AI roadmap/pipeline filling in the power analog AI sector.

Mosesmann also highlighted that the SoC AI industry design momentum assured a strong multi-year dynamic that required more sophisticated power analog and liquid cooling techniques.

Key to the story is the company's deep and sustained relationship with NVIDIA Corporation NVDA and other AI accelerator chip players in power analog chips, sub-systems, and/or modules.

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The company is also likely to gain from significant dollar content expansion in automotive platforms as the industry chases Tesla, Inc TSLA EV/autonomous driving innovation that prizes MPS programmable over-the-air power analog solutions.

For FY23, the analyst expects the company's revenues to be $1.82 billion, with EPS of $11.73.

For FY24, Mosesmann projects the company's revenues of $1.84, with an EPS of $11.00.

For FY25, the analyst forecasts EPS of $14.50, with revenues totaling $2.20 billion.

The analyst's price target of $750 underscores earnings power approaching $20 for FY25 (vs. estimate of $14.50), using a high-30's P/E multiple justified by a sustainable 20% plus sales CAGR with increasing margins, the analyst adds. 

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Price Action: MPWR shares are trading higher by 3.62% to $640.02 on the last check Tuesday.

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