Is MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI) Potentially Undervalued?

MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI), might not be a large cap stock, but it saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$149 and falling to the lows of US$109. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether MACOM Technology Solutions Holdings' current trading price of US$109 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at MACOM Technology Solutions Holdings’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for MACOM Technology Solutions Holdings

What Is MACOM Technology Solutions Holdings Worth?

MACOM Technology Solutions Holdings appears to be overvalued by 23% at the moment, based on our discounted cash flow valuation. The stock is currently priced at US$109 on the market compared to our intrinsic value of $88.69. Not the best news for investors looking to buy! But, is there another opportunity to buy low in the future? Given that MACOM Technology Solutions Holdings’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will MACOM Technology Solutions Holdings generate?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. In MACOM Technology Solutions Holdings' case, its revenues over the next few years are expected to grow by 33%, indicating a highly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth should lead to stronger cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? It seems like the market has well and truly priced in MTSI’s positive outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe MTSI should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on MTSI for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for MTSI, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you want to dive deeper into MACOM Technology Solutions Holdings, you'd also look into what risks it is currently facing. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of MACOM Technology Solutions Holdings.

If you are no longer interested in MACOM Technology Solutions Holdings, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.