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Bull of the Day: Mellanox (MLNX)

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Today’s Bull of the Day is a company that’s been on fire recently. They are in the data center infrastructure business, a huge growth area for the market. As more and more devices become connected to the internet and more data is gathered, these centers will become more prevalent throughout the globe. Powering those data centers is big business and a big reason why this stock is the Bull of the Day.

Mellanox Technologies (MLNX - Free Report) is a fabless semiconductor company, designs, manufactures, and sells interconnect products and solutions worldwide. Its products facilitate data transmission between servers, storage systems, communications infrastructure equipment, and other embedded systems. The company offers InfiniBand solutions, including switch and gateway integrated circuits (ICs), adapter cards, cables, modules, and software, as well as switch, gateway, and long-haul systems; Ethernet solutions, such as Ethernet switch products and Ethernet adapters for use in enterprise data center, high-performance computing, embedded environments, hyperscale, Web 2.0, and cloud data centers. 

Mellanox is a Zacks Rank #1 (Strong Buy) because of the recent string of positive earnings estimate revisions to the upside. Over the last 30 days, five analysts have increased their estimates for the current quarter and current year. The bullish revisions have pushed up our Zacks Consensus Estimate from 73 cents to $1.03 for the current quarter. The current year number has shot up from $3.17 just ninety days ago to $4.07 today. This year EPS growth is estimated to be 78.5%. Those are some serious EPS numbers.

Leading up to its most recent earnings report, MLNX kept running into resistance near $78. For five consecutive trading days from April 12th to April 18th, MLNX couldn’t get over the hump. Having reported within that time period, MLNX shares retreated a bit, then found a bid just north of the 50-day in the $74 handle. Another stretch towards resistance failed during the end of April but when the calendar turned over to May, MLNX finally broke on through and now is in runaway breakout mode over $84.

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