Monolithic Power Systems (MPWR) Stock Trades Up, Here Is Why
What Happened:
Shares of power management chips maker Monolithic Power Systems (NASDAQ:MPWR) jumped 17% in the morning session after the company reported fourth-quarter results and provided strong revenue guidance for the next quarter, which topped analysts' expectations. Its revenue and EPS also narrowly outperformed Wall Street's estimates during the quarter. The company also highlighted the expanded market opportunity estimated at $1 billion following the acquisition of Netherlands-based startup Axign B.V, which provides programmable multi-core digital signal processors. On the other hand, its gross margin fell, and its operating margin decreased during the quarter. Overall, this was still a strong quarter for Monolithic Power Systems.
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What is the market telling us:
Monolithic Power Systems's shares are very volatile and over the last year have had 10 moves greater than 5%. But moves this big are very rare even for Monolithic Power Systems and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was 9 months ago, when the stock dropped 6.3% on the news that the company reported first-quarter results that narrowly beat analysts' revenue estimates. EPS also beat, and inventory level improved. However, gross margin missed and is expected to move lower over the near term as the company destocks excess inventory. Additionally on the negative front, the outlook for the company in the near term seems weak, with revenue guidance for the next quarter falling below the Consensus. In the press release, the CEO stated that the company remains " cautious about near-term business conditions."
Monolithic Power Systems is up 22.5% since the beginning of the year. Investors who bought $1,000 worth of Monolithic Power Systems's shares 5 years ago would now be looking at an investment worth $5,634.
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