Credo: Optics Ramp, Margin Upside And Bullish Charts Point To More Upside (Archive)
Credo’s optics ramp, margin expansion, and technicals still justify a bullish buy rating.
This 5-Minute Pitch was originally published on Seeking Alpha. It is shared here to showcase my work and track record. I also publish full 5-Minute Pitches on this site. This will be behind a paywall, accessible to Hunter Tier members.
Elevator Pitch
- Credo is rapidly ramping its optics portfolio, with management guiding to more than $600M of optics revenue in FY27.
- Next generation 1.6T data center networks depend on 3nm chips, and 3nm capacity constraints could cap Credo’s longer term revenue upside.
- The DustPhotonics acquisition brings photonic integrated circuits in-house and reduces per module laser count by 75 percent, supporting structurally higher gross margins.
- Credo’s gross margin outlook remains strong, with management guiding to around 68 percent near term. I expect further improvement to 70%+ as the optics business scales up.
- Even after its run, CRDO's implied multi-year earnings growth expectations still look achievable relative to its margin expansion and revenue growth potential.
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