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MACOM Technology Solutions Holdings Inc (MTSI)
NASDAQ:MTSI

MACOM Technology Solutions Holdings (MTSI) AI Stock Analysis

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MACOM Technology Solutions Holdings

(NASDAQ:MTSI)

64Neutral
MACOM Technology Solutions Holdings has a balanced yet cautiously optimistic stock score. The company shows strong financial management and revenue growth, particularly in the Data Center and Defense segments. However, profitability issues and bearish technical indicators pose risks. The company's negative P/E ratio and absence of dividend yield further add to valuation challenges. Overall, while there is potential for growth, investors should be mindful of the current market conditions and profitability challenges.
Positive Factors
Data Center Growth
The data center demand has continued to strengthen, with growth potentially outpacing the 35% year-over-year performance.
Revenue and Bookings
Macom Technology Solutions has record revenue and bookings, with strengthening opportunities in data centers and telecom.
Negative Factors
Gross Margin Pressure
Better-than-expected results were overshadowed by gross margin pressure.

MACOM Technology Solutions Holdings (MTSI) vs. S&P 500 (SPY)

MACOM Technology Solutions Holdings Business Overview & Revenue Model

Company DescriptionMACOM Technology Solutions Holdings, Inc. engages in the design, development, manufacture and market of semiconductors and modules. Its products include integrated circuits (IC), multi-chip modules (MCM), power pallets and transistors, diodes, amplifiers, switches and switch limiters, passive and active components, and complete subsystems. The company was founded on March 25, 2009 and is headquartered in Lowell, MA.
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
72
Positive
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.
Balance Sheet
80
Positive
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.
Cash Flow
85
Very Positive
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.
Breakdown
TTMSep 2024Sep 2023Sep 2022Dec 2021Dec 2020
Income StatementTotal Revenue
790.55M729.58M648.41M675.17M606.92M530.04M
Gross Profit
412.73M393.77M385.80M406.18M341.86M270.17M
EBIT
80.48M73.67M107.40M247.42M81.00M-95.00K
EBITDA
-30.41M163.91M168.65M304.65M150.96M64.64M
Net Income Common Stockholders
-103.20M76.86M91.58M439.95M37.97M-46.08M
Balance SheetCash, Cash Equivalents and Short-Term Investments
656.52M581.89M514.53M586.53M344.90M333.15M
Total Assets
1.84B1.76B1.55B1.57B1.13B1.15B
Total Debt
531.02M487.78M487.33M593.96M521.09M689.42M
Net Debt
298.32M340.98M313.38M474.01M364.56M559.98M
Total Liabilities
692.74M629.30M605.64M729.07M662.41M846.28M
Stockholders Equity
1.15B1.13B947.60M842.75M471.74M300.15M
Cash FlowFree Cash Flow
173.07M140.20M142.22M150.47M130.46M153.82M
Operating Cash Flow
196.20M162.64M166.92M176.98M148.41M171.40M
Investing Cash Flow
-156.59M-181.13M36.34M-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

Technical Analysis Sentiment
Negative
Last Price104.21
Price Trends
50DMA
125.58
Negative
100DMA
127.25
Negative
200DMA
116.42
Negative
Market Momentum
MACD
-6.83
Positive
RSI
37.59
Neutral
STOCH
41.69
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 104.21 is below the 20-day moving average (MA) of 113.35, below the 50-day MA of 125.58, and below the 200-day MA of 116.42, indicating a bearish trend. The MACD of -6.83 indicates Positive momentum. The RSI at 37.59 is Neutral, neither overbought nor oversold. The STOCH value of 41.69 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 (58)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
74
Outperform
$913.26B93.5914.85%1.12%40.30%-22.79%
ADADI
71
Outperform
$103.70B66.684.43%1.78%-19.28%-44.00%
67
Neutral
$52.20B20.9328.16%1.98%-4.99%-9.18%
64
Neutral
$7.95B138.48-9.49%26.40%-234.22%
63
Neutral
$10.97B20.918.34%4.10%-12.91%-42.12%
58
Neutral
$21.67B10.04-18.58%2.39%5.01%-23.17%
55
Neutral
$6.64B245.030.77%9.51%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
MTSI
MACOM Technology Solutions Holdings
104.21
14.28
15.88%
ADI
Analog Devices
203.80
12.54
6.56%
AVGO
Broadcom
191.36
66.81
53.64%
NXPI
NXP Semiconductors
201.02
-38.64
-16.12%
SWKS
Skyworks Solutions
67.19
-34.61
-34.00%
QRVO
Qorvo
69.12
-44.46
-39.14%

MACOM Technology Solutions Holdings Earnings Call Summary

Earnings Call Date: Feb 6, 2025 | % Change Since: -23.22% | 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.