CRDO is a buy, Roth says

Following the company’s most recent results, Roth MKM analyst Suji Desilva has maintained his “Buy” rating on Credo Technology Group (Credo Technology Group Stock Quote, Chart, News, Analysts, Financials NASDAQ:CRDO).

On May 28, CRDO reported its fourth quarter and fiscal 2024 results. In the fourth quarter, the company posted a net loss of $10.5-million on revenue of $60.8-million, a topline that was up 89.4% year-over-year.

“In fiscal 2024, Credo achieved record revenue of $193.0M, with strong contributions from each of our product and license categories,” CEO Bill Brennan said. “The Company’s success in fiscal 2024 was primarily driven by our customers’ AI deployments. Looking forward, we anticipate accelerating demand for AI infrastructure. We believe customers will continue to choose Credo for their most complex connectivity needs, due to our customer centric focus on innovative, high-performance and energy-efficient solutions.”

The analyst gave his take on the results.

“CRDO reported results in line with consensus and guided revenue slightly ahead of consensus,” he noted. “We believe CRDO is seeing AI infrastructure-related revenue and growth opportunity across an increasingly larger base of enterprise/hyperscale data center customers. We are encouraged that management expects AI-related revenue to double on a y/y basis in the quarter exiting FY25.”

In a research update to clients May 29, Desilva maintained his “Buy” rating and price target of $30.00 on CRDO.

The analyst believes the company will post EPS of $0.34 per share on revenue of $311.0-million in fiscal 2025. He expects those numbers will improve to EPS of $0.65 on a topline of $456.0-million in fiscal 2026.

“Our CRDO price target of $30 represents a CY25 EV/Sales multiple of 14.0x, a premium versus established communications’ infrastructure peers’ average of 10.0x, reflecting CRDO’s long-term growth opportunity,” he added.