MIPS Technologies a Bargain

MIPS Technologies, Inc. (MIPS - Analyst Report) develops embedded processors and intellectual property for use in performance-oriented markets, such as digital entertainment, wired and wireless communications (including broadband access), office automation, security and automotive markets.

The firm continues to drive bottom-line margins higher in a very difficult environment. The valuation on MIPS has become very compelling as the stock has shed 74% from its 52-week high and the new acquisition has the potential to drive margin expansion. We would be buyers of the stock at these levels.

As spending picks up and Chipidea ramps the firm should emerge as a much stronger force with top-line and bottom-line improvement. Consequently, we are setting our $4.00 price target, which corresponds to a 23.5x P/E.

Read the full analyst report on MIPS.

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