BofA Securities Upgrades MACOM Technology Solutions (MTSI) to Buy

BofA Securities analyst Vivek Arya upgraded MACOM Technology Solutions (NASDAQ: MTSI) from Neutral to Buy, PT $105.00.

The analyst comments "We upgrade MTSI to Buy and raise estimates following completion of acquisition of Wolfspeed’s RF operations. MTSI supplies a variety of components and modules for applications across industrial and defense (~50% of sales in normalized environment), data center (~20%of sales) and telecom (~30% of sales). While we expected industrial semiconductor sales to decline -15% to -20% YoY as inventory corrections persist through Q1, aerospace and defense remains a bright spot. Multiple companies have highlighted A&D market resilience, benefitting from continued government spending as we approach an election year and operate in an uncertain geopolitical environment. We estimate ~50% of MTSI’s legacy I&D business (Industrial and Defense), comes from the defense market, well above analog/industrial peers, where A&D accounts for 10%-15% of industrial sales. In turn, MTSI I&D business could perform well above market in CY24 as inventory digestion in broader industry persists. Separately, while telecom could remain weak, it is well priced into estimates. Indeed, consensus forecasts MTSI’s legacy telco sales to fall -45% YoY from CY22-24, well below peers ranging from -10% to -35% YoY. We view that any additional telco risks are likely factored into MTSI expectations (and leave room for upside in event digestion phase ends quicker than expected)."

For an analyst ratings summary and ratings history on MACOM Technology Solutions click here. For more ratings news on MACOM Technology Solutions click here.

Shares of MACOM Technology Solutions closed at $92.09 yesterday.

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