On Tuesday, Stifel sustained its positive stance on Credo Technology Group Holding Ltd. (NASDAQ: NASDAQ:CRDO), raising the price target on the company's shares to $40.00 from the previous $36.00. The firm continues to recommend a Buy rating for the stock.
The optimism from Stifel is based on expectations that Credo Technology may surpass the current July Quarter estimates. Stifel's projection for the quarter is at $59.5 million in revenue, which would mark a slight quarter-over-quarter decrease of 2.1%. Nevertheless, Credo Technology's management has indicated strong order patterns, particularly highlighting the swift transition to AI workloads which has led to new and diverse customer interactions.
Stifel anticipates that Credo Technology could provide guidance that exceeds their current October Quarter revenue estimate of $64.4 million. This expectation takes into account the momentum in product revenue growth, coupled with positive feedback from hyperscalers and industry peers.
The revised 12-month price target of $40 is based on a multiple of 16.2 times the estimated enterprise value to sales for the calendar year 2025 (CY25E EV/sales).
In other recent news, Credo Technology Group Holding Ltd reported a record-breaking Q4 revenue of $60.8 million, an 89% increase year-over-year, primarily driven by its artificial intelligence applications. The company's IP business also experienced substantial growth, generating $16.6 million in Q4, marking a 193% increase year-over-year. In a recent development, James Laufman has been announced as the new Chief Legal Officer and Secretary, succeeding Katherine E. Schuelke.
TD Cowen has shown confidence in Credo Technology, raising its price target from $35 to $40, and upgrading the stock from Hold to Buy. The firm cited Credo's unique low-power product offerings and potential growth drivers in various connectivity markets as the basis for their adjusted outlook.
Furthermore, TD Cowen anticipates a turning point in Credo's business model beginning in the second half of fiscal year 2025. Credo Technology was also highlighted as TD Cowen's "Best Smidcap Idea," reflecting the firm's belief in the company's future performance and strategic position in the industry.
InvestingPro Insights
According to real-time data from InvestingPro, Credo Technology Group Holding Ltd. (NASDAQ: CRDO) holds a market capitalization of $5.79 billion. The company's revenue over the last twelve months as of Q4 2024 stands at $192.97 million, with a notable quarterly revenue growth of 89.42%. Despite a negative P/E ratio, indicating the company is not currently profitable, the gross profit margin remains impressive at 61.89%, reflecting the company's ability to maintain profitability at the operational level.
InvestingPro Tips highlight that Credo Technology is expected to see net income growth this year, with analysts anticipating sales growth in the current year. Additionally, 5 analysts have revised their earnings upwards for the upcoming period, signaling potential investor confidence. For readers interested in a deeper dive, there are 17 additional InvestingPro Tips available, which can be found by visiting the Credo Technology page on InvestingPro.
The price target increase by Stifel aligns with the strong performance metrics and optimistic analyst revisions, suggesting that Credo Technology's strategic focus on AI workloads and expanding customer base could translate into continued growth and potentially profitable outcomes in the near future.
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