Macom Technology Solutions Is Poised For AI-Driven Revenue Growth: Analyst

Shares of Macom Technology Solutions Holdings Inc MTSI came under pressure, despite in-line fiscal first-quarter results and outlook.

Rival Semtech Corp SMTC disclosed lower IC (integrated circuit) sales into Active Copper Cables, according to Northland Capital Partners.

The Analyst: Analyst Tim Savageaux upgraded the rating for Macom Technology Solutions from Market Perform to Outperform, while raising the price target to $140.

The Thesis: The company's first-quarter revenue grew by 9% sequentially and 39% year-on-year to $218.1 million, Savageaux said in the upgrade note.

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The sequential growth in revenues was driven by Datacom, while year-on-year growth was led by an around 80% increase in Telecom revenues due to the Wolfspeed acquisition and strong growth in Industrial/Defense revenues, he added.

"MTSI noted its third consecutive quarter with a 1.10 book to bill, the analyst stated. "MTSI noted expectations for an expansion of its AI Datacom customer base at 800G, which to date has been focused on major China module makers, as well as a ramp in solutions supporting 1.6T connectivity over the next Qs," he further wrote.

"We look to take advantage of any weakness given strong bookings and multiple growth vectors including AI Optical, Satcom and Defense," the analyst stated.

Price Action: Shares of Macom Technology Solutions had declined by 0.76% to $126.24 at the time of publication on Monday.

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