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With a market cap of $27.3 billion, Monolithic Power Systems, Inc. (MPWR) is a fabless semiconductor company specializing in high-performance power solutions, focusing on analog and mixed-signal integrated circuits (ICs). It serves various industries, including industrial, automotive, telecommunications, and consumer markets, offering products for voltage conversion, lighting control, and more.
Shares of the Kirkland, Washington-based company have underperformed the broader market over the past 52 weeks. MPWR stock has risen 2.5% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 31.8%. In 2024, shares of MPWR are down 11.2%, compared to SPX's 25.8% gain on a YTD basis.
Looking closer, the power management chips maker has also lagged behind the Technology Select Sector SPDR Fund's (XLK) 25.6% return over the past 52 weeks and a 20.3% YTD gain.
Despite reporting better-than-expected Q3 adjusted EPS and revenue of $620.1 million on Oct. 30, Monolithic Power Systems' stock plunged 17.5% the next day due to concerns over its weaker-than-expected Q4 outlook, which projected a slight decline in sales to $600 million - $620 million. The stock was further impacted by delays in Nvidia's Blackwell chips, which raised doubts about future growth in its Enterprise Data segment. Additionally, a downgrade by Rosenblatt analysts, citing increased competition from Infineon and Renesas, contributed to negative sentiment surrounding the stock.
Moreover, the stock tumbled nearly 15% on Nov. 11 after Edgewater Research analysts revealed that Nvidia had canceled half of MPWR's backlog and cut all unconfirmed orders for its power management chips, putting the company's allocation to Nvidia's Blackwell GPUs at risk. This raised concerns over product issues and the impact on MPWR's AI business.
For the current fiscal year, ending in December, analysts expect MPWR's EPS to grow 19.1% year-over-year to $10.46. The company's earnings surprise history is mixed. It beat the consensus estimates in one of the last four quarters while missing on three other occasions.
Among the 13 analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on eight “Strong Buy” ratings, two “Moderate Buys,” and three “Holds.”
On Nov. 19, KeyBanc lowered its price target for Monolithic Power to $700, maintaining an “Overweight” rating on the stock. The firm expects Monolithic Power to lose significant market share on Blackwell due to ongoing overheating issues with the Hopper PMIC, with IFX likely becoming the primary supplier.
As of writing, MPWR is trading below the mean price target of $830.64. The Street-high price target of $1,100 implies a potential upside of 96.3%.
