EUR 850.00 For Business Accounts Only

Morningstar | Xilinx Eyeing Crisp Double-Digit Growth Led By 5G, AI, and Data Center; Raising FVE to $90. See Updated Analyst Note from 14 May 2019

Xilinx hosted its annual investor meeting on May 14 at which management provided long-term expectations for the firm’s plethora of end markets. Key areas of focus include 5G, artificial intelligence, and Data Center, as the firm’s FPGAs have substantial opportunities to gain silicon content.

We appreciated the expected market growth trajectories, case studies, and examples of relevant products from Xilinx to underscore the narrow-moat FPGA leader’s momentum it has cultivated in recent years. After growing revenue 24% last fiscal year, management anticipates fiscal 2020 top-line growth at 15%, followed by continued midteens growth in both revenue and earnings through fiscal 2024. Although these targets appear quite aggressive (given increasing competition in 5G, AI, and DC), we are more comfortable with a five-year average top-line growth rate of 10%, thanks to Xilinx’s FPGA leadership. Consequently, we are raising our fair value estimate to $90 per share from $80. Nevertheless, shares look expensive at current levels, and we’d recommend prospective investors wait for a more attractive entry point.