Monolithic Power One Ups its Own Strong Quarter With Better Guidance, and Shares Are Still Cheap

We’re raising our fair value estimate for wide-moat Monolithic Power Systems, or MPS, to $540 per share, from $480 previously, as the company continues to make light work out of steamrolling our above consensus top line expectations. MPS’ first-quarter results were strong, and its impressive second-quarter guidance makes us confident it can retain momentum toward 40% sales growth for the full year. We think MPS is benefitting from tight supply at competitors allowing it to take share, which we think will be sticky in the long run. We also expect MPS to benefit from a new data center refresh cycle in the back half of 2022, and think its differentiated, integrated technology will pave long-term growth and market share gains. Shares were up 7% after hours on strong guidance, but we continue to think the market is undervaluing the long-term growth opportunity for MPS.