Piper Jaffray Reiterates Overweight on Monolithic Power, Sees $30 Price Target (MPWR)
In a research report, Piper Jaffray is putting a $30 price target on shares of Monolithic Power (NASDAQ: MPWR) after the company lifted its guidance for non-GAAP operating margins. Piper Jaffray rates the shares as Overweight.
In the report, Piper Jaffray writes, "MPWR increased its guidance for non-GAAP operating margins from a range of 20%-25% to 22%-27%. The company also lowered its gross margin target from 58%-63% to 50%-55%. We think this lower GM will drive stronger top line growth of 25%-30% up from 20%-25%, accelerating earnings growth. While investors may not like the shift in the operating targets, it will likely drive stronger EPS growth going forward, in our view. In conjunction with the earnings announcement, the company announced a $50M share repurchase program. The company has a strong free cash flow and receives minimal interest income - share repurchases will likely be accretive to earnings. In our view, the change to the operating model is targeted to optimize earnings growth, and strong new product flow with share repurchases helping to accelerate EPS growth. Ultimately, we believe shareholders will benefit from these moves. We reiterate our Overweight rating."
Shares of Monolithic Power are getting hit hard this morning, trading down 2.87% to $18.62.
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