MPWR - Embedded Expectations Analysis - 2021 09 24
Monolithic Power Systems, Inc. (MPWR:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with an 81.8x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may have concerns about margin expansion, supply headwinds, and their short-term pricing strategy.Specifically, management may lack confidence in their ability to meet their long-run gross margin expansion goals, manage R&D and litigation expenses, and diversify their supply chain. Furthermore, management may lack confidence in their ability to gain market share and capitalize on new product opportunities. Additionally, they may have concerns about the cost impact of headcount increases, automotive industry use of just-in-time inventory models, and their customers' potential inventory build-up. Moreover, they may be downplaying concerns about the design issues in their medical products and the difficulties of taking appropriate pricing actions given the supply chain disruptions, and they may lack confidence in their ability to accelerate revenue growth in the future.
Monolithic Power Systems is a fabless semiconductor company. The company designs, develops and markets power solutions for systems found in consumer, computing and storage, automotive, industrial, communications and consumer applications. The company's primary product families include the following: Direct Current (DC) to DC products, which are used to convert and control voltages within a range of electronic systems such as portable electronic devices, wireless Local Area Network access points, computers, and monitors, automobiles and medical equipment; and Lighting Control Products, which include lighting control integrated circuits that are used in backlighting and general illumination products.
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