Monolithic Power: Increase Fair Value to $770 After Management Raises Guidance; Shares Undervalued

Wide-moat Monolithic Power Systems laid out new guidance for the upcoming quarter and highlighted its diverse, enduring product portfolio during its 2025 investor day. The firm raised its first-quarter guidance, now expecting revenue in the range of $630 million-$640 million (previously $610 million-$640 million), GAAP operating expenses of $184.9 million-$190.9 million (previously $180.2 million-$186.2 million), and non-GAAP operating expenses of $131.6 million-$135.6 million (previously $126.9 million-$130.9 million). Management also discussed 2025-27 non-GAAP financial goals, with revenue targets largely unchanged at 10%-15% above market and gross margins in the range of 55%-60%. These goals are largely in line with our model. We continue to believe the firm’s ongoing innovation in integrated solutions and robust customer acquisition strategies set the foundation for a solid growth trajectory. We have lifted our near-term estimates per management guidance, but keep our long-term estimates intact. As a result, we increased our fair value estimate to $770 from $760. We now view shares as moderately undervalued.