MaxLinear, Inc. (NYSE: MXL)
“Envisioning, Empowering, Excelling.” That is the company slogan of MaxLinear, the Carlsbad, CA based semiconductor producer and broadband solution provider. With the stock rising 33% in the last month, I think most investors would agree that MaxLinear has at least been holding true to the “excelling” part of its motto recently.
The company was founded in 2003 and it went public at the end of March 2010. Its stock price stumbled down for almost two years before finally finding support in the $5 range. 2013 was a turnaround year for the shares, but 2014 was another bumpy road as earnings flattened out. The most recent bottom appears to have been hit in September just above the $6 mark with share prices wandering up since then.
MXL On The Move
The wandering turned into a full march upward at the beginning of May this year. Two big developments announced on April 30th helped propel the stock into the new month. First, MaxLinear announced strong first quarter earnings on April 30th. Adjusted earnings per share came in at $0.09, which beat Wall Street’s consensus expectation by 2 cents. Total revenue on the quarter was $35.4 million. In the same earnings announcement, MXL estimated the next quarter’s earnings to be $37 to $38 million. The second announcement was the completion of MaxLinear’s acquisition of Entropic Communications, another semiconductor solutions company. The deal was expected to increase MaxLinear’s product offerings and customer base. Share prices broke the $9 per share barrier on the next day, and the stock has been cruising ever since.
MXL share prices got kicked up into another gear on June 8th with another major announcement. Revenue guidance for the second quarter and the year were moved much higher to reflect the contributions of the Entropic Communications acquisition. Second quarter earnings that were expected to be in the $37 to $38 million range according to the April 30th release were revised up to the $68 to $72 million range. And revenue for the second half of the year is now expected to be between $175 and $185 million.
Another smaller announcement also came on June 8th. It wasn’t quite as large as doubled revenue guidance but a positive sign nonetheless. In SEC filings, it was revealed that the 29th richest man in the world, George Soros, is buying up more and more shares of MaxLinear. Soros began his investment in MaxLinear in the first quarter of this year, and he has recently increased his holding from 766,700 shares to 2,690,000 shares. And he is not alone in the hedge fund world. Comparing the previous quarter to the quarter ending in March, total hedge fund money invested in the company went from $19.8 million invested by 12 hedge funds to $30.65 million invested by 16 hedge funds.
Analysts On MaxLinear
After all this exciting news, analyst upgrades were sure to follow. Chardon Capital and Zacks both recently upgraded MXL to a buy rating and raised their price targets. Others like Stifel Nicolaus and Deutsche Bank reiterated buy ratings and raised their price targets. Currently, MXL has one hold rating, seven buy ratings, and an average price target of $14. We’ll see if stock prices can continue to “excel” from here.