Analysts have increased their fair value estimate for Monolithic Power Systems from $979 to $1,161. This change reflects stronger-than-expected guidance and continued share gains in Enterprise Data and Industrial segments.

Analyst Commentary

Recent updates from the Street reflect a positive reassessment of Monolithic Power Systems' outlook. Analysts are responding to the company's stellar quarterly results and raised guidance, with several notable upward adjustments to price targets and ratings. Major themes have emerged from the latest research notes, highlighting important factors for both optimism and caution regarding the company's future performance.

Bullish Takeaways

• Bullish analysts cite strong Q3 results and guidance, emphasizing outperformance in Enterprise Data and Industrial segments that exceeded expectations.
• Management's expectation of 30% to 40% growth in the Enterprise Data segment by 2026 is regarded as a conservative estimate, indicating further upside potential.
• Potential share gains, especially related to major customers like Nvidia, are expected to contribute to robust growth in the second half of 2025 and into 2026.
• Product and customer expansions across Enterprise Data, Communications, Automotive, and Compute are supporting a more diversified revenue base and enhancing the company's growth profile.

Bearish Takeaways

• Some Street commentary points out that Monolithic's valuation remains elevated, which could limit near-term potential for new investors despite growth prospects.
• Projected modest declines in certain segments, such as a possible 4% drop in Enterprise in 2025, illustrate caution about end-market demand even as the company surpasses its own estimates.
• The rapid pace of growth in recent quarters raises questions about whether these momentum levels can be maintained, particularly if customer expansions stall or macroeconomic conditions become less favorable.

What's in the News

• Provided updated earnings guidance for the fourth quarter ending December 31, 2025, expecting revenue in the range of $730.0 million to $750.0 million (Key Developments)
• Faced a new patent infringement lawsuit filed by Reed Semiconductor Corp., alleging infringement of U.S. Patent No. 7,960,955 and bad-faith interference with Reed’s business relationships. This follows previous legal actions between the companies from 2023 to 2025 (Key Developments)
• Completed a share buyback tranche by repurchasing 4,000 shares for $2.71 million between April 1 and June 30, 2025, as part of the program announced in February 2025 (Key Developments)

Valuation Changes

• Fair Value Estimate has increased from $979 to $1,161, reflecting a notable upward revision.
• Discount Rate has risen slightly, from 10.04% to 10.09%.
• Revenue Growth expectation has increased from 15.9% to 17.9%, indicating stronger anticipated top-line expansion.
• Net Profit Margin projection has decreased modestly, from 25.5% to 24.2%.
• Future P/E multiple has risen from 58.2x to 66.0x. This suggests heightened investor expectations for earnings.