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KeyBanc raises Monolithic Power shares target, cites NVIDIA server success

EditorEmilio Ghigini
Published 04/08/2024, 09:37 AM

Monday - Analysts at KeyBanc have increased the price target for Monolithic Power Systems (NASDAQ:MPWR) shares to $850 from the prior $850 while maintaining an Overweight rating on the stock. The revised target comes as a response to recent positive developments related to the company's products used in NVIDIA (NASDAQ:NVDA)'s H100 servers.

KeyBanc's adjustment reflects a decrease in Return Material Authorizations (RMAs) for NVIDIA's H100 servers, indicating a successful resolution to prior power stage failures. This improvement suggests that Monolithic Power Systems will likely retain a larger market share than previously expected. The initial forecast had anticipated a 10-20% loss in market share across NVIDIA's H100 and upcoming B100/B200 servers.

The firm's decision to raise the price target is also based on an anticipated increase in demand for AI servers in 2025. This forecast aligns with NVIDIA's plans to double its Chip-on-Wafer-on-Substrate (CoWoS) production capacity. Additionally, KeyBanc has increased their estimates due to higher Average Selling Price (ASP) assumptions for NVIDIA's forthcoming GB200 product.

Monolithic Power Systems is seen to benefit from the growing demand in the AI server market, with NVIDIA's expansion efforts playing a significant role. The company's ability to resolve the earlier issues with its power stage components has contributed to the positive outlook from KeyBanc, as it implies a stronger performance and customer confidence in Monolithic Power's offerings.

InvestingPro Insights

Monolithic Power Systems (NASDAQ:MPWR) has recently been in the spotlight following KeyBanc's upgraded price target, reflecting confidence in the company's market share and product reliability. To provide investors with a deeper understanding, InvestingPro data shows a market capitalization of $32.82 billion and a high P/E ratio of 75.57, indicating that the market values the company's growth potential. Additionally, with a robust gross profit margin of 56.07% over the last twelve months as of Q1 2023, Monolithic Power Systems demonstrates its ability to maintain profitability.

Two notable InvestingPro Tips for Monolithic Power Systems include the company's consistent dividend growth, having raised its dividend for 6 consecutive years, and the fact that 10 analysts have revised their earnings upwards for the upcoming period. This suggests a positive sentiment around the company's financial health and future performance. Moreover, with the company trading at a high revenue valuation multiple, investors are paying a premium for its sales, which may be justified by its strong market position and growth prospects.

For those looking to delve further into Monolithic Power Systems' financials and future outlook, there are additional InvestingPro Tips available. Take advantage of the exclusive offer for our readers and use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at https://www.investing.com/pro/MPWR.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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