MACOM Technology Solutions Holdings, Inc.
MTSI
reported fourth-quarter fiscal 2020 non-GAAP earnings of 40 cents per share, beating the Zacks Consensus Estimate by 5.3%. Further, the bottom line improved by 21.2% sequentially. Also, the figure jumped significantly from a penny in the year-ago quarter.
Revenues of $147.2 million too surpassed the Zacks Consensus Estimate of $146 million. Moreover, the top line rose7.3% sequentially and 31.2%from the year-ago quarter.
The company’s solid momentum across data center market drove the top line during the reported quarter.
Notably, shares of the company have inched up 4.4% following its recent earnings release and a better-than-expected outlook provided for the fiscal first quarter.
The company remains optimistic about strong 5G network deployments and a growing data center trafficwhich are to continue driving its top line in the fiscal first quarter.
Notably, MACOM has returned 66.7% on a year-to-date basis compared with the
industry
’s rise of 23.5%.
End-Market in Detail
Telecom Market:
The company generated revenues of $55.4 million (38% of total revenues) from this market, down 2% sequentially.
Nevertheless, the company witnessed solid 5G demand during the fiscal fourth quarter which remained a tailwind.
Data Center Market:
This market generated revenues worth $43.9 million (30% of total revenues), which surged 35% from the prior quarter. Strong cloud services demand benefited both domestic and international deployments of the company during the reported quarter. Moreover, its high-performance 100G analog product lines remained key positive.
Industrial &Defense Market:
MACOM generated revenues of $47.9 million (32% of total revenues), which was flat on a sequential basis.
Operating Details
In third-quarter fiscal 2020, non-GAAP gross margin was 56.4%, which expanded 340 basis points (bps) year over year.
In the reported quarter, non-GAAP operating expenses were $48.9 million, which declined 4.3% year over year. As a percentage of revenues, the figure contracted significantly from 45.5% in the prior-year quarter to 33.2%.
Consequently, the company’s non-GAAP operating margin was 23.2%, which significantly expanded from 7.6% in the prior-year quarter.
Balance Sheet & Cash Flow
As of Oct 2, 2020, cash equivalents and short-term investments were $333.1 million, up from $265.1million as of Jul 3, 2020. Inventories were $91.6 million, down from $95.6million in the last reported quarter.
Long-term debt obligations excluding current portion were $652.2 million in the fiscal fourth quarter compared with $652.9million in the previous quarter.
Cash generated from operations was $74.4 million, up from $34.1 million in the last quarter.
Further, the company’s free cash flow in the reported quarter was $69.5 million compared with $30.4 million in the prior quarter.
Guidance
For first-quarter fiscal 2021, MACOM expects revenues between $146 million and $150 million. The Zacks Consensus Estimate for the metric is pegged at $147.1 million.
Further, the company’s adjusted earnings per share are anticipated in the range of 41-45 cents. The Zacks Consensus Estimate for the same is pegged at 37 cents per share.
Moreover, non-GAAP gross margin is anticipated in the range of 56-58%.
Zacks Rank & Key Picks
MACOM currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader sector are NVIDIA
NVDA
, Himax Technologies
HIMX
and Covetrus
CVET
. While NVIDIA sports a Zacks Rank #1 (Strong Buy), Himax and Covetrus carry Zacks Rank #2 at present. You can see
the complete list of today’s Zacks #1 Rank stocks here.
Covetrus is set to report results on Nov 10 while Himax and NVIDIA are scheduled to release earnings on Nov 12 and Nov 18, respectively.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
