MLNX

Mellanox Technologies Ltd

TMT


Presented:09/13/2018
Price:$77.35
Cap:$4.09B
Current Price:$124.89
Cap:$6.93B

Presented

Date09/13/2018
Price$77.35
Market Cap$4.09B
Ent Value$4.31B
P/E Ratio75.1x
Book Value$21.95
Div Yield0%
Shares O/S52.93M
Ave Daily Vol444,862
Short Int0.65%

Current

Price$124.89
Market Cap$6.93B
Mellanox Technologies Ltd. engages in the development, manufacture, marketing and sale of interconnect products. It includes integrated circuits, adapter cards, switch systems, multi-core and network processors, systems on a chip, cables, modules, software, services, and accessories. Its products facilitate efficient data transmission between servers, storage systems, communications infrastructure equipment, and other embedded systems. The company was founded by Eyal Waldman, Michael Kagan, Shai Cohen, Alon Webman and Roni Ashuri in March 1999 and is headquartered in Yokeneam, Israel.

Publicly traded companies mentioned herein: Broadcom Inc (AVGO), Facebook Inc (FB), Intel Corporation (INTC), Marvell Technology Group Ltd (MRVL), Mellanox Technologies Ltd (MLNX), Microsoft Corp (MSFT)

Highlights

The presenter is long shares of Mellanox Technologies (MLNX), believing that the recent pullback from the high $80s to ~$77 represents a potentially attractive entry point. In his opinion, the risk/ reward setup is favorable as the unique history of events surrounding a rejection of Marvell’s advances toward the company, Starboard Value’s activism (which began in November 2017), and the successful launch of MLNX’s high-speed Ethernet adapter (25 Gbps) have led to a near-perfect storm for the company. With Street estimates for revenue and earnings growth playing catch-up, and the potential for MLNX to maintain its leadership position - and market share - in the rapidly growing high-speed Ethernet adapter market, a beat-and-raise scenario is likely. If MLNX can maintain 68% gross margins and earn $6.50 in 2019, while experiencing mid-teens (%) top line growth, the presenter thinks shareholders could see substantial upside potential over the next 12 - 24 months (i.e., 12x his forward earnings estimate meaningfully undervalues the company).

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Idea Discussion

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