Pixelworks Analyst Opts For Conservative Numbers Until More Visibility

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  • 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.
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