Monolithic Power Systems, Inc. (MPWR) — A recent breakout in MPWR stock makes it an attractive buy for both traders and investors at the current price.
S&P Capital IQ Equity Research considers shares of the analog and mixed-signal integrated circuit maker to be high risk, as the company is part of the highly cyclical semiconductor industry. Nevertheless, its analysts are bullish on MPWR stock based on the company’s improving fundamentals and attractive balance, as well as the potential for market share increases.
Monolithic Power has a history of solid revenue and earnings growth, and that trend looks set to continue. Capital IQ forecasts revenue will increase 19% in 2016 and 18% in 2017. Its analysts estimate earnings will jump more than 160% this year to $2.26 per share and increase another 18% to $2.67 per share next year. And they rate MPWR stock a “Buy” with a 12-month price target of $75, noting that this represents a justifiable premium to Monolithic Power’s peers based on the company’s growth prospects.
Turning to the chart, MPWR stock broke from a bullish saucer formation in late March by closing above the resistance line at $62.50. The top of the saucer is the all-time high at $69.25. It was achieved in early December following a run up from the August lows near $45. Volume supports the breakout, and the MACD indicator is on a buy signal.
Traders should buy MPWR stock at $64 or less with a target of $75 for a potential gain of 17%. A stop-loss order can be entered below $57.
MPWR stock is also a good buy candidate for investors as a long-term hold due to the company’s attractive fundamentals and modest annual dividend of 80 cents per share. That equates to a current forward annual yield of 1.3%, with the next quarterly payment expected in late June.
