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Mellanox Hits 52-Week High on Rapid Adoption & Contract Wins
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Shares of Mellanox Technologies, Ltd. rallied to a fresh 52-week high of $76.80, closing marginally lower at $75.80 on Mar 20. The company has a market capital of $3.16 billion.
Notably, the stock has returned 48.8% in the past year, substantially better than the industry’s rally of 8.8%. The momentum can be attributed to ongoing customer transition to 25, 50 and 100 gigabit per second (gbps) Ethernet solutions. Moreover, new contract wins and collaborations are key catalysts.
Mellanox has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in three of the trailing four quarters.
Positive Earnings Estimate Revisions
Over the last 30 days, first-quarter fiscal 2018 estimates were revised upward, resulting in the Zacks Consensus Estimate rising from 61 cents to a whopping 82 cents per share. The figure reflects year-over-year growth of 182.76%.
The Zacks Consensus Estimate for fiscal 2018 and 2019 is currently pegged at $3.66 and $4.17, respectively. The figures reflect year-over-year growth of 17.41% and 8.00%, respectively.
What’s Behind the Rally?
Mellanox recently issued a higher first-quarter fiscal 2018 revenue guidance driven by rapid customer transition to 25 GB Ethernet adapters.
In fourth-quarter of fiscal 2017, the company reported revenues of $237.6 million, which increased 7.2% year over year and 5.3% sequentially. Notably, the Zacks Consensus Estimates for revenues is now pegged at $244.10 million, reflecting year-over-year growth of 29.39%.
Robust Portfolio & Rapid Adoption
The company boasts of a robust portfolio. With the recent release of Spectrum-based Ethernet Network Operating System, Mellanox Onyx, it has become one of the leading providers of ethernet-based interconnect applications solution to futuristic data centers.
Strong adoption of 100 GB EDR solutions in machine learning, artificial intelligence, high-performance computing, database and storage contributes toward revenue growth.
Apart from the ethernet solutions, strong demand for Infiniband solution has been driving growth. Of late, InfiniBand has been the preferred interconnect for AI and deep learning systems.
The company recently crossed one million volume shipments of 100 gbps QSFP28 ports which include LinkX optical transceivers, Direct Attach Copper Cables and Active Optical Cables. Mellanox also unveiled new 100G and 200G/400G LinkX products.
Furthermore, the company started shipping BlueField chips during the fourth quarter, resulting from EZchip acquisition, which has been experiencing increased market traction.
The company has emerged as a formidable player in the field of semiconductor technology. The products provide Mellanox a competitive edge in the industry.
Notable Collaborations & Contract Wins
Mellanox recently collaborated with Microsoft’s (MSFT - Free Report) Azure to develop a simple and cost-effective solution via the company’s Spectrum switches and adapters. The solution will extend cloud connectivity for on-premise data centers to Microsoft Azure.
The company’s previous collaborations with the likes of NEC Corporation, Atos, VMware, Hewlett Packard Enterprise and Microsemi Corporation have helped it expand footprint in the cloud and datacenter as well as high performance computing market.
The company recently won contract from Tel-Aviv Stock Exchange (“TASE”). Ethernet solutions of Mellanox will enable TASE to provide market operators with state-of-the-art services globally.
Furthermore, the company has won contracts from the likes of NetApp (NTAP - Free Report) , the University of Toronto and NASA Ames Research Center, which reflects strong demand for its solutions.
To Conclude
Mellanox continues to capitalize on enhancing solution range and improving capacity constraints along with contract wins and collaborations. This bodes well for the company as it provides it with a competitive edge in the semiconductor industry.
Zacks Rank and Other Stocks to Consider
Currently, Mellanox sports a Zacks Rank #1 (Strong Buy).
Long-term earnings growth rate for MSCI is currently pegged at 10.00%.
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With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
Mellanox Hits 52-Week High on Rapid Adoption & Contract Wins
Shares of Mellanox Technologies, Ltd. rallied to a fresh 52-week high of $76.80, closing marginally lower at $75.80 on Mar 20. The company has a market capital of $3.16 billion.
Notably, the stock has returned 48.8% in the past year, substantially better than the industry’s rally of 8.8%. The momentum can be attributed to ongoing customer transition to 25, 50 and 100 gigabit per second (gbps) Ethernet solutions. Moreover, new contract wins and collaborations are key catalysts.
Mellanox has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in three of the trailing four quarters.
Positive Earnings Estimate Revisions
Over the last 30 days, first-quarter fiscal 2018 estimates were revised upward, resulting in the Zacks Consensus Estimate rising from 61 cents to a whopping 82 cents per share. The figure reflects year-over-year growth of 182.76%.
The Zacks Consensus Estimate for fiscal 2018 and 2019 is currently pegged at $3.66 and $4.17, respectively. The figures reflect year-over-year growth of 17.41% and 8.00%, respectively.
What’s Behind the Rally?
Mellanox recently issued a higher first-quarter fiscal 2018 revenue guidance driven by rapid customer transition to 25 GB Ethernet adapters.
In fourth-quarter of fiscal 2017, the company reported revenues of $237.6 million, which increased 7.2% year over year and 5.3% sequentially. Notably, the Zacks Consensus Estimates for revenues is now pegged at $244.10 million, reflecting year-over-year growth of 29.39%.
Robust Portfolio & Rapid Adoption
The company boasts of a robust portfolio. With the recent release of Spectrum-based Ethernet Network Operating System, Mellanox Onyx, it has become one of the leading providers of ethernet-based interconnect applications solution to futuristic data centers.
Strong adoption of 100 GB EDR solutions in machine learning, artificial intelligence, high-performance computing, database and storage contributes toward revenue growth.
Apart from the ethernet solutions, strong demand for Infiniband solution has been driving growth. Of late, InfiniBand has been the preferred interconnect for AI and deep learning systems.
The company recently crossed one million volume shipments of 100 gbps QSFP28 ports which include LinkX optical transceivers, Direct Attach Copper Cables and Active Optical Cables. Mellanox also unveiled new 100G and 200G/400G LinkX products.
Furthermore, the company started shipping BlueField chips during the fourth quarter, resulting from EZchip acquisition, which has been experiencing increased market traction.
The company has emerged as a formidable player in the field of semiconductor technology. The products provide Mellanox a competitive edge in the industry.
Notable Collaborations & Contract Wins
Mellanox recently collaborated with Microsoft’s (MSFT - Free Report) Azure to develop a simple and cost-effective solution via the company’s Spectrum switches and adapters. The solution will extend cloud connectivity for on-premise data centers to Microsoft Azure.
The company’s previous collaborations with the likes of NEC Corporation, Atos, VMware, Hewlett Packard Enterprise and Microsemi Corporation have helped it expand footprint in the cloud and datacenter as well as high performance computing market.
The company recently won contract from Tel-Aviv Stock Exchange (“TASE”). Ethernet solutions of Mellanox will enable TASE to provide market operators with state-of-the-art services globally.
Furthermore, the company has won contracts from the likes of NetApp (NTAP - Free Report) , the University of Toronto and NASA Ames Research Center, which reflects strong demand for its solutions.
To Conclude
Mellanox continues to capitalize on enhancing solution range and improving capacity constraints along with contract wins and collaborations. This bodes well for the company as it provides it with a competitive edge in the semiconductor industry.
Zacks Rank and Other Stocks to Consider
Currently, Mellanox sports a Zacks Rank #1 (Strong Buy).
Another top-ranked stock in the broader technology sector trading at 52-week high is MSCI Inc (MSCI - Free Report) . You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for MSCI is currently pegged at 10.00%.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>