Simon Woo, an analyst from Bank of America Securities, reiterated the Buy rating on Silicon Motion. The associated price target was raised to $130.00.
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Simon Woo has given his Buy rating due to a combination of factors including Silicon Motion’s strong anticipated financial performance and strategic product developments. The company is expected to surpass market expectations in the upcoming quarters, driven by a favorable product mix, particularly with the PCIe Gen 5 technology for both client and enterprise SSDs. Additionally, projections for 2026 indicate a significant revenue increase to over $1.0 billion and a gross margin of 48%, which surpasses previous years’ levels.
Furthermore, the introduction of a new boot drive for NVIDIA’s AI server presents a promising long-term growth catalyst alongside the MonTitan product line. Simon Woo also highlights the potential for strong earnings per share growth and a robust return on equity, which could lead to a re-rating and higher valuation multiples. The revised price objective of $130, based on a 4.9x price-to-book ratio, suggests a 41% upside potential, further supported by the possibility of a special dividend from a deal break-up fee if Silicon Motion wins its arbitration case.