Follow The Insiders And Other Key Signals: Mellanox Technologies, Ltd. (MLNX)

Mellanox Technologies, Ltd. (NASDAQ:MLNX) has been upgraded by JP Morgan, which now rates the stock as Overweight versus Neutral prior rating, according to a note issued on October 25. Analysts at BofA/Merrill, started covering the stock on October 10 with a Buy rating. Analysts at Jefferies, made their first call about the stock on October 02, recommending it is Buy. The Benchmark Company, reiterated their call for Buy, on July 18. On the other hand, they had set new target price to $120 versus $110.

MLNX stock dropped -0.11% in recent trade and currently has a stock-market value of $6.4B. The shares finished at $118.02, after trading as low as $118 earlier in the session. It hit an intraday high Thursday at $118.35. Trading activity significantly weakened as the volume at ready counter decreased to 2,191,402 shares versus 2,693,715 in average daily trading volume over the past 20 days. So far this year, the volume has averaged about 1,757,686 shares. The stock is now 79.69% above against its bear-market low of $65.68 on October 24, 2018. It has retreated -0.92% since it’s 52-week high of $119.1 reached in March. Now the market price is up 64.03% on the year and up 27.75% YTD.

Wall Street’s most bullish Mellanox Technologies, Ltd. (NASDAQ:MLNX) analysts are predicting the share price to blow past $130 per share during the next 12 months. The current median share price forecast by them is $125, suggesting that the stock could increase 5.91% in that time frame. The average price target of $123.25 calls for a nearly 4.43% increase in the stock price.

Mellanox Technologies, Ltd. (MLNX)’s 50 day simple moving average (SMA 50) price is $96.74 and its 200-day simple moving average (SMA 200) price is $86.57. The company’s stock currently has a total float of 49.67M shares. Its weekly volatility is hovering around 0.91% and felt 2.17% volatility in price over a month. On the upside, the share price will test short term resistance at around $118.25. On a downside, the stock is likely to find some support, which begins at $117.9. The failure to get near-term support could push it to $117.77.

When looking at valuations, Mellanox Technologies, Ltd. (MLNX) has a pricey P/E of 47.98x as compared to industry average of 9.03x. Moreover, it trades for 16.9 times the next 12 months of expected earnings. Also, it is trading at rather expensive levels at just over 4.87x price/book and 5.88x price/sales. Compared to others, Mellanox Technologies, Ltd. is in a different league with regards to profitability, having net margins of 12.3%. To put some perspective around this, the industry’s average net margin is 19.1%. MLNX’s ROE is 11.1%, which is also considerably better than the industry’s ROE of 6.85%. It’s also very liquid in the near term, with a current ratio of 3.3. The stock has a debt/capital of 0.

Shares of MLNX have gained 35% since the company’s most recent earnings report. Over the past 12 fiscal quarters, Mellanox Technologies, Ltd. (NASDAQ:MLNX) has topped consensus earnings estimates in 6 quarters (50%), missed earnings in 6 quarters (50%), whereas at 0 occasion EPS met analyst expectations. MLNX last reported earnings that exceeded expectations. The company raked in $1.42 per share, -84.27% change on the same period last year. That was better than consensus for $1.3. Revenue for the recent quarter stood at $290.07 million, up 22% on last year and above the $284.96 million predicted by analysts. For this quarter, Wall Street analysts forecast revenue in a range of $300 million to $301.2 million, which should be compared with $258.23 million generated last year. EPS is seen in a range of $1.37 to $1.5, against the $0.9 reported a year ago.