Analyst Note| Brian Colello, CPA |
Narrow-moat Monolithic Power Systems reported a strong fourth quarter, exceeding both FactSet consensus estimates and previous guidance. Management issued positive guidance for the first quarter of 2021, with revenue far exceeding consensus estimates, while gross margin should remain solid. Monolithic saw broad-based success this quarter, with all segments up year over year. As a result of our model roll and the time value of money, strong performance across all segments, and increased confidence in our long-term growth expectations, we are raising our fair value estimate to $252 from $155. With shares trading above $360, we view shares as overvalued and recommend investors wait for a more appropriate entry point.