FROM SEEKING ALPHA
MaxLinear (NASDAQ: MXL) shares had plunged 12% during early market action on Friday despite producing third-quarter financial results and an outlook that surpassed estimates across the board.
Despite the acceleration, some financial firms remain on the sidelines due to MaxLinear's ongoing arbitration with Silicon Motion (NASDAQ: SIMO).
MaxLinear had entered into an agreement to acquire Silicon Motion in 2022. It later decided to back out of the agreement, prompting Silicon Motion to file an arbitration claim in the Singapore International Arbitration Centre. It is asking for $160M as a termination fee.
"While the business continues to recover nicely off the bottom, we maintain our Hold rating pending the outcome of the Silicon Motion arbitration," said Needham analysts, led by N. Quinn Bolton, in a Friday investor note.
"The legal arbitration with Silicon Motion has commenced, and a decision is expected to be announced in C1H26," Bolton added. "Management feels confident about the company's position ahead of the decision but did not provide any additional commentary. We are encouraged by the business's return to positive cash flow and an improving cash position ahead of the arbitration and into 2026."
Similarly, Roth reiterated its Neutral rating following the latest financial results.
"MXL guided 4Q25 revenue of $130-140m (+4-11% q/q) ahead of consensus expectations of $130.5m (+4.7% q/q)," said Roth analyst Suji Desilva in an investor note. "We believe MXL is seeing the benefit from multiple growth drivers with data center optical 400G/800G program ramp representing the largest growth contributor. We continue to expect optical segment to nearly double y/y in CY25 with 800G design penetration and ramp across cloud data center optical module customers."
Meanwhile, Benchmark was encouraged by the results and outlook and maintained its Buy rating on the stock.
"With inventory digestion complete, new program ramps accelerating, and the potential SIMO arbitration resolution in 1H26 as a near-term catalyst, we see meaningful upside entering 2026," said Benchmark analyst David Williams in an investor note. "Our $25 price target reflects a 35% discount to the peer group average, as the market continues to underappreciate MXL’s structural growth drivers and improving earnings power." |
