MACOM Technology Solutions Holdings (MTSI) AI Stock Analysis

• Market Cap: $9.18B
• Dividend Yield: N/A
• Average Volume (3M): 936.23K
• Price to Earnings (P/E): 138.5
• Beta (1Y): 1.69
• Revenue Growth: 32.63%
• EPS Growth: -233.25%
• Country: US
• Employees: 1,700
• Sector: Technology
• Sector Strength: 77
• Industry: Semiconductors
• EPS (TTM): 0.85
• Shares Outstanding: 74,390,670
• 10 Day Avg. Volume: 1,086,172
• 30 Day Avg. Volume: 936,227
• PEG Ratio: <0.01
• Price to Book (P/B): 7.10
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 48.23
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $141.60
• Price Target Upside: 15.56% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 11

MACOM Technology Solutions Holdings demonstrates strong revenue growth and a stable financial position, which are significant strengths. However, challenges with profitability, as indicated by negative net income and EBITDA, and valuation concerns due to a negative P/E ratio, weigh on the overall score. Technical indicators show positive momentum, but potential overbought conditions warrant caution. The earnings call provided a positive outlook with promising segment performances and guidance, yet highlighted some operational challenges.

Positive Factors

Data Center Growth

Data center remained the standout, tracking well ahead on an accelerating pace in deployments of latest generation high speed connectivity solutions.

Earnings

Macom's better than expected results and solid upside to June quarter guidance reflect sustained improvement in the underlying demand dynamics of the business with book-to-bill increasing to 1.1 with continued momentum in order activity, and another quarter of record backlog.

Negative Factors

Gross Margin

Gross margin was once again the only potential negative largely driven by under absorption in the Lowell fab, which should rebound once demand improves in the traditional Industrial markets and mix becomes more favorable.

Gross Margin Pressure

Macom's better-than-expected results were overshadowed by gross margin pressure, despite improvement in demand dynamics.

MACOM Technology Solutions Holdings Business Overview & Revenue Model

Company Description

MACOM Technology Solutions Holdings, Inc., together with its subsidiaries, designs and manufactures analog semiconductor solutions for use in wireless and wireline applications across the radio frequency (RF), microwave, millimeter wave, and lightwave spectrum in the United States, China, the Asia Pacific, and internationally. The company offers a portfolio of standard and custom devices, including integrated circuits, multi-chip modules, diodes, amplifiers, switches and switch limiters, passive and active components, and subsystems. Its semiconductor products are electronic components that are incorporated in electronic systems, such as wireless basestations, high-capacity optical networks, radar, and medical systems and test and measurement. The company serves various markets comprising telecommunication that includes carrier infrastructure, which comprise long-haul/metro, 5G, and fiber-to-the-X/passive optical network; industrial and defense, including military and commercial radar, RF jammers, electronic countermeasures, and communication data links, as well as multi-market applications, such as industrial, medical, test and measurement, and scientific applications; and data centers. It sells its products through direct sales force, applications engineering staff, independent sales representatives, resellers, and distributors. The company was founded in 1950 and is headquartered in Lowell, Massachusetts.

How the Company Makes Money

MACOM 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, as evidenced by an 8.35% increase in revenue and a 23.44% rise in free cash flow. However, profitability challenges, such as negative net income and declining margins, indicate risks. The balance sheet remains strong, with a high equity ratio and controlled leverage, 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.

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.

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.

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
656.52M	581.89M	514.53M	586.53M	344.90M	333.15M
	Total Assets
1.84B	1.76B	1.55B	1.57B	1.13B	1.15B
	Total Debt
531.02M	487.78M	487.33M	593.96M	521.09M	689.42M
	Net Debt
298.32M	340.98M	313.38M	474.01M	364.56M	559.98M
	Total Liabilities
692.74M	629.30M	605.64M	729.07M	662.41M	846.28M
	Stockholders Equity
1.15B	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

• Technical Analysis Sentiment: Positive
• Last Price: 122.53
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MTSI, the sentiment is Positive. The current price of 122.53 is above the 20-day moving average (MA) of 111.23, above the 50-day MA of 105.63, and above the 200-day MA of 116.34, indicating a bullish trend. The MACD of 5.53 indicates Negative momentum. The RSI at 67.61 is Neutral, neither overbought nor oversold. The STOCH value of 85.00 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for MTSI.

MACOM Technology Solutions Holdings Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NVMI	82 Outperform	$5.62B	33.58	21.90%	―	29.83%	33.42%
ONTO	74 Outperform	$4.91B	22.75	11.83%	―	21.23%	56.90%
LSCC	74 Outperform	$6.94B	135.83	7.39%	―	-29.54%	-76.42%
SWKS	71 Outperform	$11.01B	28.64	6.70%	3.79%	-12.90%	-51.90%
MTSI	69 Neutral	$9.18B	138.48	-7.70%	―	32.63%	-233.25%
Sector *	60 Neutral	$11.58B	10.33	-7.23%	2.94%	7.47%	-10.84%
QRVO	57 Neutral	$7.44B	136.18	1.60%	―	-1.34%	―