On Monday, Benchmark has increased its price target for MaxLinear (NASDAQ:MXL) to $28.00, up from the previous target of $22.00, while reiterating a Buy rating on the stock. The firm's analyst expressed a heightened confidence in MaxLinear's prospects heading into calendar year 2025, citing several factors that could contribute to the company's growth.
The analyst highlighted that despite concerns regarding potential liabilities related to Silicon Motion (NASDAQ:SIMO) Technology Corporation (SIMO), there is an expectation of a positive outcome from the ongoing arbitration. A settlement is viewed as the most probable resolution, with the full breakup fee considered the worst-case scenario. The resolution is anticipated by the end of the first quarter of 2025 and is expected to act as a catalyst for the stock by removing the current overhang.
MaxLinear's business fundamentals are reportedly strengthening, as evidenced by positive booking trends and robust demand for infrastructure. The company's performance has been bolstered by the introduction of new products and a recovery in data center connectivity demand. These factors are projected to support substantial annualized revenue growth over the next few years.
Despite a lag in performance compared to its peers this year, MaxLinear is expected to benefit from its involvement in AI-related sectors. The analyst predicts that this will become more apparent in the upcoming quarters and will likely lead to upward revisions in the conservative fiscal year 2025 and 2026 consensus estimates.
The firm's analysis suggests that MaxLinear's stock has the potential for significant growth due to these underlying business drivers.
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