NEW YORK (TheStreet) -- Shares of MaxLinear (MXL) were gaining 11.3% to $12.12 on heavy trading volume Tuesday after the semiconductor company revised its second quarter guidance to reflect the contribution of Entropic, which it recently acquired.
MaxLinear said it now expects to report revenue of $68 million to $72 million for the second quarter. Analysts surveyed by Thomson Reuters expect MaxLinear to report revenue of $62.12 million for the second quarter.
The company said it expects a gross margin of about 57.5% in the second quarter plus or minus 2%.
"We are seeing strong follow-through of demand across the range of our expanded technology and market-leading broadband data and video product portfolio," Chairman and CEO Kishore Seendripu, Ph.D. said in a statement. "This demand is being primarily driven by tier-one operators across the globe, who continue to invest in higher-bandwidth and richer multimedia content delivery platforms."
About 2 million shares of MaxLinear were traded by 10:54 a.m. Tuesday, above the company's average trading volume of about 287,000 shares a day.
TheStreet Ratings team rates MAXLINEAR INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate MAXLINEAR INC (MXL) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- MXL's revenue growth has slightly outpaced the industry average of 0.6%. Since the same quarter one year prior, revenues slightly increased by 8.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- MXL has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, MXL has a quick ratio of 2.15, which demonstrates the ability of the company to cover short-term liquidity needs.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 447.8% when compared to the same quarter one year ago, falling from -$0.86 million to -$4.72 million.
- Net operating cash flow has declined marginally to $3.77 million or 7.89% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full analysis from the report here: MXL Ratings Report