MXL Stock Forecast for 2022: A Perspective Stock in the Frame of Negative Monetary Expectations

Adi Raved This MXL Stock Forecast for 2022 article was written by Adi Raved – Financial Analyst at I Know First.

Highlights

  • MaxLinear shows a high rate of revenue growth by 127.04% for nine months ended in 2021 compared with 2020.
  • It is expected that MXL will get breakeven in 2022.
  • The Piotroski F-Score and price ratios provide a positive outlook for MXL’s stocks.
  • Institutional investors own around 83% of the company stocks.
(Source: https://www.maxlinear.com)

Overview

MaxLinear is an American hardware company that strives to improve the world’s communication networks by connecting people through their highly integrated radio-frequency (RF), analog, digital, and mixed-signal semiconductor solutions for access and connectivity, wired and wireless infrastructure, and industrial and multi-market applications. The company’s innovative solutions help shape the future of networking and communications technology; They drive 4G and 5G infrastructure; enable data center, metro and long-haul optical interconnects; bring 10Gbit to the home; power the IoT revolution; and enable robust and reliable communication for industrial and enterprise applications.

The company was founded in 2003 and is since headquartered in Carlsbad California. MXL employs approximately 1,400 workers around the world. MaxLinear’s ability to design analog and mixed-signal circuits in CMOS allows the efficient combination of analog and digital signal processing functionality in the same integrated circuit. As a result, MaxLinear solutions have high levels of functional integration and performance, small silicon die size, and low power consumption.

Is There a Place for a Hardware Company in a Portfolio Now?

Technology Robot Sci Woman Cyborg Android Background Humanoid Artificial  Intelligence — Free Stock Photo © abidal #275369004
(Source: depositphotos.com)

The ongoing outbreak of coronavirus, as well as subsequent outbreaks driven by new variants, such as the Omicron variant, and government restrictions forced people around the globe to stay home day after day for a very long while. After an initial shock, the extended-stay indoors has resulted in new trends such as remote working and distance learning. Those trends helped accelerate the adoption of fast, reliable wireless technologies and drive the demand for connected devices and networking equipment. According to survey data, 79% of executives plan to allow employees to continue to work remotely at least part-time, and over 70% of employees want flexible remote work options to remain in place. In the United States alone, the virtual care market is expected to grow at a compound annual growth rate of 40% through 2025, signaling projected demand for remote connectivity. Another implication of the COVID-19 pandemic is that global supply chains and shipments slowed, causing worldwide shortages and affecting consumer patterns, a problem that MXL clearly had to face too.

MXL’s revenue significantly increased for nine months ended in 2021 compared with 2020 and 2019. It is worth mentioning that the revenue did not decrease due to the COVID-19 crisis. Moreover, the share of broadband in the revenue structure is the most significant, and it has increased from 2020 to 2021.

(Figure 1 – The Revenue Structure, Nine Months Ended on September 30 for 2019 – 2021)

During the last financial year, 2020, MXL lost US$99mln and had a trailing twelve-month loss of 1 million dollars. However, for the last quarter, the company had a profit of US$9mln. Analysts agree that MaxLinear is on the verge of breakeven. They expect that throughout 2022 the company will generate positive profits of 98 million dollars. Therefore, the company is expected to break even roughly a year from now. Furthermore, MXL’s current P/E Non-Gaap (TTM) ratio of 24.72, and Price/Sales TTM ratio of 4.93 that less than on average across peers.


(Figure 2 – P/S Ratio)
(Figure 3 – P/E Ratio, Non-GAAP TTM)

MXL looks intriguingly in terms of Piotroski F-Score and Altman Z-Score. Piotroski F-score is a number between 0 and 9 that is used to assess the soundness of a company’s financial position. A score of 7 may indicate that the company’s stock is undervalued and can be interpreted by investors as a good signal to buy the stock. The Altman Z-score is the result of a credit test that measures the likelihood of a publicly owned manufacturing company going bankrupt. It is also at a safe level for MXL. Also, we need to notice that institutional investors own around 83.33% of the company stocks which tells us that MXL has a good long-term perspective.

(Source: GuruFocus)

MaxLinear announced that it will release its financial results for the fourth quarter of 2021 on February 2, 2022. The Yahoo Finance coverage for the company is performed by 7 analysts, and all of them take a buy position on the stock. The analysts’ community puts the average target price for the stock at $75.60 while it is traded at $54.88.

(Source: YahooFinance)

MXL looks like a profitable investment opportunity. However, investors should notice the risk of MXL’s stocks. It is expected that the FED will increase interest rates to deal with inflation which will provide a negative environment for the stock market, because of raising capital costs. Especially, it will have a negative impact on such a growth stock as MXL, where most part of the current stock price depends on the expected income which the company will earn in the future. Currently, the company has a high level of debt (Debt-to-Equity is 0.78) taking into account the FED expected monetary policy can create a high level of volatility for MXL’s stocks.

MXL Stock Forecast: Conclusion

MXL is a buy stock with a positive business growth outlook. Despite the fact that the FED plans to increase interest rates that will hit growth stocks, MXL looks promising in the context of its Piotroski F-Score and price ratios. Also, it is expected with a high grade of probability that the company will get breakeven in 2022.

It is worth paying attention that the stock-picking AI of I Know First has a high signal on the one-year market trend forecasts, supporting my position for the MXL stock forecast. The light green for the short-term forecasts is mildly bullish, while the darker green is a strong bullish signal for the one-year forecast.

Past Success With MXL Stock Forecast

I Know First has been bullish on the MXL stock forecast in the past. On December 22th, 2020 the I Know First algorithm issued a forecast for MXL stock price and recommended MXL as one of the best stocks to buy. The AI-driven MXL stock prediction was successful on a 1-year time horizon resulting in more than 108.19%.

Trade Ideas
Trade Ideas chart
I Know First Premium article

To subscribe today click here.

Please note-for trading decisions use the most recent forecast.