After B.Riley FBR and J.P. Morgan gave Silicon Motion (NASDAQ: SIMO) a Buy rating last month, the company received another Buy, this time from Needham. Analyst Rajvindra Gill maintained a Buy rating on Silicon Motion today and set a price target of $58. The company’s shares opened today at $36, close to its 52-week low of $35.25.
Gill said:
“We maintain our Buy on SIMO and slightly lower our PT to $58 (vs. $60). While 3Q18 results came in higher than expected, 4Q revenue missed our ests. by 16% primarily due to the delayed project rollout of Shannon systems at Alibaba and Bidu. Conversely, client SSDs grew 35% Q/Q and are expected to grow next year due to rapid declines in client SSD ASPs. With more revenue from client SSDs, gross margins were guided to 51% for 4Q18, +230bps higher than our ests, despite revenue declining Q/Q. We expect Shannon to rebound in 2Q19/3Q19 and will be additive to the overall revenue growth rate. SIMO remains significantly undervalued: the 2019 P/E has contracted to 8x from 12x in just three-months. We would buyers at these levels.”
According to TipRanks.com, Gill is a 5-star analyst with an average return of 13.2% and a 54.3% success rate. Gill covers the Consumer Goods sector, focusing on stocks such as Everspin Technologies Inc, Smart Global Holdings Inc, and Adesto Technologies Corp.
Silicon Motion has an analyst consensus of Strong Buy, with a price target consensus of $60.29.
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Silicon Motion’s market cap is currently $1.39B and has a P/E ratio of 16.99. The company has a Price to Book ratio of 2.52.
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Silicon Motion Technology Corp. engages in the development, manufacture, and supply of semiconductor products for the electronics market. It offers embedded and expandable storage, radio frequency integrated circuits, and embedded graphics. The company was founded in November 2005 and is headquartered in Hong Kong.
