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MACOM Technology Solutions Holdings Inc (MTSI)
NASDAQ:MTSI
RESEARCH TOOLSreports
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MACOM Technology Solutions Holdings
(NASDAQ:MTSI)
64Neutral
Positive Factors
Data center demand
The data center demand has continued to strengthen, with growth potentially outpacing the 35% year-over-year performance in 2024.
Product portfolio
The company's diversified and architecture agnostic, high speed optical and electrical product portfolio is enabling MTSI to participate across the breadth of data center connectivity solutions in traditional and AI workloads.
Revenue and bookings
Macom Technology Solutions has record revenue and bookings, with strengthening opportunities in data centers and telecom.
Negative Factors
Demand trajectory
Although the ACC opportunity has shifted with its lead customer transitioning to a 1 rack implementation on the next generation architecture, impacting the demand trajectory, the firm remains upbeat on the technology’s potential.
Gross margin pressure
Macom's better-than-expected results were overshadowed by gross margin pressure, despite improvement in demand dynamics.
Utilization issues
NG GM will be under pressure through FY25 due to underutilization in the Lowell fab.
MACOM Technology Solutions Holdings (MTSI) vs. S&P 500 (SPY)
Market Cap
$6.68B
Dividend YieldN/A
Average Volume (3M)830.54K
Price to Earnings (P/E)138.5
Beta (1Y)1.76
Revenue Growth26.40%
EPS Growth-234.22%
CountryUS
Employees1,700
SectorTechnology
Sector Strength40
IndustrySemiconductors
Share Statistics
EPS (TTM)-1.43
Shares Outstanding74,339,820
10 Day Avg. Volume871,200
30 Day Avg. Volume830,539
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)10.05
Price to Cash Flow (P/CF)29.80
P/FCF Ratio29.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$151.00Price Target Upside72.30% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering8
MACOM Technology Solutions Holdings Business Overview & Revenue Model
Company DescriptionMACOM Technology Solutions Holdings (MTSI) is a leading provider of semiconductor solutions that enable next-generation internet and modern communication applications. The company operates in the semiconductor industry, focusing on the design and manufacture of high-performance analog radio frequency (RF), microwave, millimeterwave, and photonic semiconductor products. MACOM serves a diverse range of markets, including telecommunications, industrial, aerospace, and defense, providing innovative solutions that enhance the performance and efficiency of electronic systems.
How the Company Makes MoneyMACOM Technology Solutions Holdings generates revenue primarily through the sale of its semiconductor products. The company's key revenue streams include the production and distribution of RF and microwave components, photonic solutions, and high-performance analog devices. MACOM's products are integral to the infrastructure of telecommunication networks, data centers, and industrial applications, driving demand in these sectors. Additionally, the company benefits from strategic partnerships and long-term contracts with leading technology and communication companies, which contribute significantly to its earnings. MACOM continuously invests in research and development to innovate and expand its product offerings, further solidifying its market position and revenue potential.
MACOM Technology Solutions Holdings Financial Statement Overview
Summary
MACOM Technology Solutions Holdings demonstrates solid revenue growth and effective cash flow management. However, profitability challenges, as seen in negative net income and declining margins, present risks. Financial stability is maintained through prudent balance sheet management, but improvements in operational efficiency are needed to enhance profitability and shareholder returns.Income Statement
MACOM Technology Solutions Holdings shows a positive revenue growth trajectory with TTM revenue up by 8.35% compared to the previous year. However, the net profit margin in TTM is negative due to a net loss. Gross and EBIT margins are declining, indicating potential cost pressures or pricing issues. The company needs to improve its operational efficiencies to return to profitability.72
Positive
Balance Sheet
The company maintains a strong equity base with an equity ratio of 62.42% in TTM, indicating financial stability. Debt-to-equity ratio is moderate at 0.46, suggesting controlled leverage. However, the decrease in ROE from previous years highlights inefficiencies in generating profits from equity.80
Positive
Cash Flow
Strong cash flow management is evident with a 23.44% increase in free cash flow from the previous year, enhancing liquidity. The operating cash flow to net income ratio is robust, indicating efficient cash generation from operations despite the net loss. Continued focus on free cash flow growth will support future investments and debt management.85
Very Positive
| Breakdown | |||||
| TTM | Sep 2024 | Sep 2023 | Sep 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 790.55M | 729.58M | 648.41M | 675.17M | 606.92M | 530.04M | Gross Profit |
| 412.73M | 393.77M | 385.80M | 406.18M | 341.86M | 270.17M | EBIT |
| 80.48M | 73.67M | 107.40M | 247.42M | 81.00M | -95.00K | EBITDA |
| -30.41M | 163.91M | 168.65M | 304.65M | 150.96M | 64.64M | Net Income Common Stockholders |
| -103.20M | 76.86M | 91.58M | 439.95M | 37.97M | -46.08M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 33.11M | 581.89M | 514.53M | 586.53M | 344.90M | 333.15M | Total Assets |
| 198.21M | 1.76B | 1.55B | 1.57B | 1.13B | 1.15B | Total Debt |
| 0.00 | 487.78M | 487.33M | 593.96M | 521.09M | 689.42M | Net Debt |
| -33.11M | 340.98M | 313.38M | 474.01M | 364.56M | 559.98M | Total Liabilities |
| 130.74M | 629.30M | 605.64M | 729.07M | 662.41M | 846.28M | Stockholders Equity |
| 67.47M | 1.13B | 947.60M | 842.75M | 471.74M | 300.15M |
| Cash Flow | Free Cash Flow | ||||
| 173.07M | 140.20M | 142.22M | 150.47M | 130.46M | 153.82M | Operating Cash Flow |
| 196.20M | 162.64M | 166.92M | 176.98M | 148.41M | 171.40M | Investing Cash Flow |
| -156.59M | -181.13M | 36.34M | -182.86M | -2.58M | -107.19M | Financing Cash Flow |
| 30.11M | -9.06M | -149.02M | -28.91M | -119.09M | -10.72M |
MACOM Technology Solutions Holdings Technical Analysis
Negative
87.64
Price Trends
113.07
Negative
124.21
Negative
116.38
Negative
Market Momentum
-4.09
Positive
40.12
Neutral
25.13
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MTSI, the sentiment is Negative. The current price of 87.64 is below the 20-day moving average (MA) of 102.97, below the 50-day MA of 113.07, and below the 200-day MA of 116.38, indicating a bearish trend. The MACD of -4.09 indicates Positive momentum. The RSI at 40.12 is Neutral, neither overbought nor oversold. The STOCH value of 25.13 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MTSI.
MACOM Technology Solutions Holdings Risk Analysis
MACOM Technology Solutions Holdings disclosed 53 risk factors in its most recent earnings report. MACOM Technology Solutions Holdings reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
MACOM Technology Solutions Holdings Peers Comparison
Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $5.00B | 29.19 | 21.90% | ― | 29.83% | 33.42% | |
70 Outperform | $5.50B | 26.00 | 11.01% | ― | 21.01% | 65.27% | |
64 Neutral | $6.68B | 138.48 | -9.49% | ― | 26.40% | -234.22% | |
64 Neutral | $5.45B | 85.65 | 8.71% | ― | -30.90% | -76.39% | |
63 Neutral | $8.20B | 16.36 | 8.34% | 5.21% | -12.91% | -42.12% | |
57 Neutral | $18.45B | 9.41 | -13.97% | 2.74% | 5.04% | -23.56% | |
51 Neutral | $5.27B | 179.60 | 0.77% | ― | 9.51% | ― |
* Technology Sector Average
Performance Comparison
MTSI
MACOM Technology Solutions Holdings
87.64
-11.82
-11.88%
LSCC
Lattice Semiconductor
37.84
-37.90
-50.04%
ONTO
Onto Innovation
105.60
-78.73
-42.71%
NVMI
Nova
166.72
-7.59
-4.35%
SWKS
Skyworks Solutions
49.20
-50.31
-50.56%
QRVO
Qorvo
50.81
-62.57
-55.19%
MACOM Technology Solutions Holdings Earnings Call Summary
Earnings Call Date: Feb 6, 2025 | % Change Since: -35.43% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong revenue growth and cash flow, particularly in the Data Center and Defense segments, with a solid book-to-bill ratio indicating healthy demand. However, challenges in achieving target gross margins due to telecom market softness and under-absorption in the Lowell fab, along with a significant non-cash loss from debt refinancing, provided some counterbalance.Highlights
Record Quarterly Revenue
MACOM reported a new quarterly record high revenue of $218.1 million, up 8.7% sequentially.
Strong Data Center Growth
Data Center revenue was $65.3 million, up 16% sequentially, indicating strong growth in this segment.
Solid Free Cash Flow
Free cash flow for Q1 was approximately $63 million, showcasing strong cash generation capabilities.
Book-to-Bill Ratio
The company achieved a book-to-bill ratio of 1.1:1, indicating a healthy demand and future revenue potential.
Defense and Industrial Market Strength
Industrial and Defense revenue reached a record $97.4 million, up 5% sequentially, driven by growth in the defense business.
Positive Financial Outlook
Revenue for Q2 is expected to be in the range of $227 million to $233 million, with sequential revenue growth expected in all end markets.
Lowlights
Gross Margin Pressure
Adjusted gross profit margin was 57.5%, 60 basis points lower than the preceding quarter due to under-absorbed costs in the Lowell fab.
Telecom Market Challenges
Despite being up 7% sequentially, the telecom market faced ongoing softness affecting wafer volumes and gross margins.
Debt Refinancing and Loss
In December 2024, the company recorded a one-time primarily non-cash loss of $193.1 million related to the refinancing of convertible notes.
Company Guidance
In their first fiscal quarter of 2025 conference call, MACOM reported a revenue of $218 million with an adjusted EPS of $0.79 per diluted share, marking a positive start to the fiscal year. The company saw an increase in free cash flow to $63 million and held $657 million in cash and short-term investments. The revenue breakdown showed Industrial and Defense at $97.4 million, Data Center at $65.3 million, and Telecom at $55.4 million, with sequential growth of 16% in Data Center, 7% in Telecom, and 5% in Industrial and Defense. The Q1 book-to-bill ratio stood at 1.1:1, indicating strong order activity and record backlog levels. For the second quarter, MACOM provided revenue guidance of $227 million to $233 million, with an expected adjusted EPS between $0.82 and $0.86, and maintained a positive outlook for growth across all end markets.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.