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MaxLinear Stock Up 445% Since March; More Gains Ahead?
MaxLinear, Inc. (NYSE:MXL) investors are probably scratching their heads, wondering why everyone is talking about a massive sell-off in tech stocks. From February 16 to 22, the S&P 500 lost 3.8% of its value, with many of the biggest names in tech getting pummeled. Over the same time frame, MaxLinear stock advanced 18%.
Trading at record levels, MXL stock is up 144.4% year-over-year, while the S&P 500 is only up 16.8% and the Nasdaq is up 56%.
Since bottoming in March 2020, MaxLinear stock has soared 445%. In 2021, it has advanced 10%.
That optimism is well placed. In addition to reporting years of strong revenue growth, including record fourth-quarter financial results, MaxLinear, Inc. recently launched a big share repurchase program and announced that it’s collaborating with Facebook, Inc. (NASDAQ:FB).
Chart courtesy of StockCharts.com
MXL Stock Overview
MaxLinear is a fabless semiconductor company that provides radio frequency and mixed-signal integrated circuits for the cable and satellite broadband communications; industrial; connected home; and wired and wireless 5G infrastructure markets. (Source: “Investor Presentation: December 2020,” MaxLinear, Inc., last accessed February 25, 2021.)
Each segment provides the company with different degrees of growth. The connected home end market is considered to be stable, the industrial/multi-market is experiencing moderate growth, and the 5G infrastructure end market is experiencing high growth.
The company sells its products to original equipment manufacturers (OEMs), module makers, and original design manufacturers (ODMs).
MaxLinear, Inc.’s customers include Apple Inc (NASDAQ:AAPL), Cisco Systems, Inc. (NASDAQ:CSCO), Nokia Corporation (NYSE:NOK), Verizon Communications Inc. (NYSE:VZ), and Walt Disney Co (NYSE:DIS).
Collaboration with Facebook
On February 16, MaxLinear announced a collaboration with Facebook Connectivity to integrate silicon technologies and radio processing algorithms into “Evenstar” radio units. (Source: “MaxLinear Collaborates with Facebook Connectivity on Evenstar OpenRAN Solutions,” MaxLinear, Inc., February 16, 2021.)
Facebook Connectivity is an umbrella platform for Facebook, Inc.’s various global Internet connectivity initiatives. Through those initiatives, Facebook works to bring more of the world online (about half the world’s population).
The Evenstar program is a collaborative effort focused on building a general-purpose radio access network (RAN) reference architecture for 4G and 5G networks in the OpenRAN ecosystem.
Through the partnership, MaxLinear will integrate its “MaxLin” radio processing algorithms with Evenstar radio units to enhance performance and reduce costs.
Share Repurchase Program
On February 24, MaxLinear, Inc. announced a $100.0-million share buyback program. The term of the current repurchase authorization expires on February 16, 2024.
“We are excited about our future as we continue to drive growth in our data connectivity and access platforms, 5G wireless infrastructure, high speed optical datacenter interconnects, and power and industrial interfaces,” said Kishore Seendripu, chairman, president, and CEO. (Source: “MaxLinear Announces $100 Million Share Repurchase Plan,” MaxLinear, Inc., February 24, 201.)
He added, “The stock repurchase program we are announcing today demonstrates our confidence in our long-term growth prospects and commitment to delivering stockholder value.”
Record Q4 Results
On February 3, MaxLinear announced that its revenue for the fourth quarter ended December 31, 2020 increased 178% year-over-year and 24% sequentially to a record $197.4 million. (Source: “MaxLinear, Inc. Announces Fourth Quarter 2020 Financial Results,” MaxLinear, Inc., February 3, 2021.)
The company’s net cash flow from operating activities was a record $74.3 million, compared to $16.6 million in the prior quarter and $28.1 million in the year-ago quarter.
MaxLinear, Inc. reported a fourth-quarter net loss of $24.6 million ($0.33 per share), a marked improvement over the third-quarter net loss of $36.6 million ($0.50 per share). In the fourth quarter of 2019, the company reported a net loss of $8.1 million ($0.11 per share).
For the first quarter of 2021, MaxLinear expects to report revenue between $200.0 and $210.0 million, representing year-over-year growth of 240%.
Analyst Take
Big tech stocks might have taken a beating in late February, but 5G stocks like MaxLinear stock climbed into record territory.
And for good reason. MaxLinear, Inc. reported record fourth-quarter results and its 13th consecutive year of revenue growth. Moreover, the company’s $100.0-million stock repurchase program underscores its financial strength and long-term prospects.
All of which has resulted in strong capital appreciation. In spite of the COVID-19 pandemic, MXL stock performed well in 2020, doubling in value that year. It looks like 2021 could be even more fruitful for MaxLinear stock investors.
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