Nomura Raises Price Target On Mellanox Technologies Following Q4 Beat

In a report published Thursday, Nomura analyst Sanjay Chaurasia reiterated a Buy rating on

, and raised the price target from $58.00 to $60.00. In the report, Nomura noted, “Q4 results beat our estimates on higher HPC and Ethernet revenue. Mellanox guided Q1 revenue flat to up 3% ($140- 145m) vs. consensus expectations of flat growth in a seasonally weaker period. The company indicated that it started shipping its 100Gbps InfiniBand EDR solution ahead of schedule. We maintain our view that the company could grow its Ethernet revenue significantly over the next several periods. The company indicated InfiniBand design wins at 8 out of top 10 solid-state storage vendors, which should ramp over the next several periods. We are increasing our CY15 EPS estimate from $2.35 to $2.45. We are also establishing our CY16 estimates of $651m/$2.55. Our new price target of $60 ($58) is based on 24x CY16E EPS, which is slightly higher than vs. 3-yr average multiple of 22x on PE (FY2). Mellanox has $8 in net cash per share.” Mellanox Technologies closed on Wednesday at $43.38.