Update (4:40 p.m.): Updated with Monday market close information.
NEW YORK (TheStreet) -- PLX Technology (PLXT) surged Monday after Avago Technologies (AVGO) - Get Report announced it would acquire the company in an all-cash deal that values PLX at approximately $298.3 million.
The two companies valued the deal at approximately $309 million. Avago would commence a tender offer for all outstanding PLX shares at $6.50 a share. The deal should close in the fourth quarter of Avago's fiscal year.
The stock closed up 9.09%, or 54 cents, to $6.48. More than 15.7 million shares changed hands, which eclipsed the average volume of 246,461.
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Separately, TheStreet Ratings team rates PLX TECHNOLOGY INC as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate PLX TECHNOLOGY INC (PLXT) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, solid stock price performance, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- PLXT's debt-to-equity ratio is very low at 0.08 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 2.75, which clearly demonstrates the ability to cover short-term cash needs.
- Net operating cash flow has significantly increased by 127.60% to $1.04 million when compared to the same quarter last year. In addition, PLX TECHNOLOGY INC has also vastly surpassed the industry average cash flow growth rate of 3.29%.
- Compared to its closing price of one year ago, PLXT's share price has jumped by 26.58%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- PLX TECHNOLOGY INC's earnings per share declined by 16.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, PLX TECHNOLOGY INC turned its bottom line around by earning $0.16 versus -$0.11 in the prior year. This year, the market expects an improvement in earnings ($0.28 versus $0.16).
- The gross profit margin for PLX TECHNOLOGY INC is rather high; currently it is at 61.46%. Regardless of PLXT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 8.80% trails the industry average.
- You can view the full analysis from the report here: PLXT Ratings Report
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.