The fabless semiconductor company,
Mellanox Technologies Ltd
) is scheduled to release its fiscal second quarter 2012 results
after the closing bell on July 18, 2012. In the run up to the
earnings release, we do not notice any estimates revision from the
analysts covering the stock.
Mellanox has outperformed the Zacks Consensus Estimate in the
preceding four quarters by an astounding 54.49%. We expect this
trend to continue in the current quarter.
Previous Quarter Highlights
Mellanox' first quarter 2012 earnings of 34 cents per share
soared 161.5% from the year-ago quarter and surpassed the Zacks
Consensus Estimate by 16 cents (88.9%).
The better-than-expected results were primarily driven by strong
revenue growth and operating margin expansion. Revenues jumped
61.1% on a year-over-year basis to $88.7 million. Operating margin
expanded to 17.6%, significantly higher than 8.8% in the year-ago
The strong growth in revenues was primarily driven by higher
demand for InfiniBand products, particularly FDR (Fourteen Data
Rate) and QDR (Quad Data Rate).
Mellanox expects second quarter revenues to increase
sequentially aided by higher demand for its InfiniBand products,
particularly due to the general availability of Intel's Romley and
Sandy Bridge platforms, which are expected to add an additional $30
million to second quarter revenues.
Estimate Revision Trend
In the last 30 days, none of the eight analysts covering the
stock revised their estimates. Thus, the Zacks Consensus Estimate
for third quarter 2012 is pinned at 55 cents. For the second
quarter, the revenue estimate as per Zacks Consensus is $120.0
million, lower than the guided range of $125.0-$130.0 million.
Analysts covering the stock expect the company to report robust
results on the back of its continued demand for its InfiniBand
products coupled with its 10/40G Ethernet solutions and web 2.0,
cloud, and storage markets.
We have an Outperform recommendation on the stock based on the
demand for its products and customer base comprising the likes of
International Business Machines Corp
). Moreover, the company's expansions in the cloud and enterprise
storage segments are the other positives. However, competition from
) are the primary headwinds for the company.
We currently have a Zacks #1 Rank for Mellanox, which translates
into a 'Strong Buy' rating in the short tem.
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