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Investing.com - Mizuho raised its price target on Credo Technology Group Holding Ltd. (NASDAQ:CRDO) to $220 from $200 while maintaining an Outperform rating. The stock has surged 307% over the past year and jumped 45% in the last week alone, currently trading at $161.81 with a market cap of $29.4 billion.
The price target increase follows Credo’s announcement of its acquisition of DustPhotonics, a supplier of Silicon Photonics Integrated Circuits. Mizuho estimates the acquisition will drive fiscal 2027 revenue up more than 75% year-over-year, compared with consensus estimates of 53% growth. According to InvestingPro Tips, 13 analysts have revised their earnings upwards for the upcoming period, though the stock appears overvalued relative to its Fair Value. For deeper insights, investors can access comprehensive Pro Research Reports covering CRDO and 1,400+ other US equities.
The firm projects the acquisition will add approximately $200 million in fiscal 2027 revenue and around $0.51 of earnings per share. DustPhotonics’ patented Low Loss Laser Coupling technology could position the company favorably against competitors and deliver improved Silicon Photonics performance, scalability, and higher continuous-wave laser yields.
The acquisition expands Credo’s total addressable market in optical technology. Mizuho estimates the Silicon Photonics Integrated Circuits market could reach approximately $6 billion by 2030, incremental to the company’s prior opportunities in AEC, ZF Optics, DSP, and ALC, which represent a combined $10 billion opportunity.
Mizuho views Credo’s multi-pronged copper and optical system solution strategy as well positioned in the AI data center networking landscape.
In other recent news, Credo Technology Group Holding announced a definitive agreement to acquire DustPhotonics, a developer of Silicon Photonics Photonic Integrated Circuit technology for optical transceivers. The acquisition is valued at $750 million in cash and includes approximately 0.92 million shares of Credo common stock, with potential additional shares based on financial milestones. This move aims to expand Credo’s optical interconnect portfolio, enhancing their capabilities in Near Port Optics and Co-Packaged Optics applications. Jefferies has initiated coverage on Credo with a buy rating, citing growth prospects in artificial intelligence applications. Meanwhile, Mizuho reiterated its Outperform rating on Credo, highlighting the company’s leadership in data center growth and optical technologies. In another development, Credo and TE Connectivity have reached a license and settlement agreement regarding AEC technology, resulting in the dismissal of all lawsuits between the companies. The details of this settlement remain confidential.
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