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MACOM Shares Rise After BMO Upgrade to Outperform on Valuation
MACOM Technology Solutions Holdings Inc. (NASDAQ:MTSI) shares rose 2.8% in premarket trading on Friday after BMO Capital Markets upgraded the stock, pointing to a more compelling valuation after a recent sell-off.
BMO Cites Attractive Entry Point
BMO Capital analyst Harsh Kumar upgraded MACOM to Outperform from Market Perform and established a price target of $335.00. The upgrade follows a 36% decline in the company's stock from its peak in May.
According to the analyst note, this pullback has made the company's valuation more attractive. Forward multiples have contracted from the high-50s in June to approximately 29x, providing a better entry point for investors. BMO also raised its revenue and earnings per share estimates for the company.
AdDatacenter and Defense Underpin Outlook
Despite the stock's recent performance, BMO noted that MACOM's business fundamentals remain solid. Growth is primarily driven by strong demand in its datacenter and industrial/defense segments.
The firm highlighted continued infrastructure deployment for artificial intelligence by hyperscalers, communications service providers, and AI labs as a key tailwind for its datacenter business. BMO also described the defense segment as resilient and projected that the space sector will become a material contributor to growth in the coming year.
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