NEW YORK, March 22, 2011 /PRNewswire/ -- Monolithic Power Systems (MPWR: $13) has been picked by Standard & Poor's Equity Research as its Focus Stock of the Week. MPWR carries S&P's highest investment recommendation of 5-STARS, or Strong Buy.
"We view Monolithic Power Systems as a high-growth semiconductor company that participates in the power management arena," said Angelo Zino, Information Technology Analyst at Standard & Poor's Equity Research. "The company also utilizes a fabless business model, which means it outsources manufacturing processes to other chipmakers. We believe this lets the company focus on its strengths of engineering and design and reduces its fixed costs and capital expenditures, allowing it to potentially generate higher margins than many peers."
Zino believes the chip industry over the last two quarters witnessed a period of lower orders, as customers absorbed excess inventory levels. "We think MPWR and other chipmakers reacted quickly, and expect the inventory glut to be short lived. We see sales as well as margins for MPWR beginning to rebound in the second quarter and following more seasonal patterns going forward," added Zino.
Zino thinks the company has faced several challenges over the last several quarters, but he believes MPWR has identified and resolved these issues. He sees growth opportunities in its primary markets as well as in adjacent markets, driven by new product releases. "We believe MPWR's exposure into the LED (Light Emitting Diode), networking and telecom markets will result in higher revenue potential starting in the second half of 2011," said Zino.
To view a video of Mr. Zino discussing MPWR paste the following link into your browser.
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