Inphi Rockets Speedy Digital Drone To Rival Apple, Amazon, Facebook
Inphi ( IPHI ) and Microsoft ‘s ( MSFT ) 100-gigabit “drone” — likely to rival infrastructures by Apple ( AAPL ), Facebook ( FB ) and Amazon.com ( AMZN ) — earned chipmaker Inphi at least three price-target hikes Wednesday, as shares rocketed to a record high. Midday on the stock market today , Inphi shares were up more than 6%, near 32.50, after earlier flying as much as nearly 8% to an all-time high above 33. Shares outperformed a lazy Wall Street on Wednesday that saw the S&P 500, Nasdaq composite and Dow Jones industrial average all down. Deutsche Bank analyst Ross Seymore upgraded Inphi stock to a buy rating from hold and upped his price target to 40 from 30, acknowledging the pricey entry point. Analysts with Northland and Stifel Nicolaus boosted their price targets on Inphi stock to 36 from 31, and to 40 from 38, respectively. “We have long acknowledged Inphi’s solid execution and technology position but have maintained a hold rating awaiting an opportunistic entry point,” Seymore wrote in a research report. But “the size and diversity of the growth drivers the company is addressing are too compelling to ignore.” On Tuesday, Inphi unveiled its 100G “drone,” capable of connecting multiple data centers within 80 kilometers (about 50 miles). The current industry solution is for a much slower 10G platform, says Jeff Cox, Microsoft senior director of network architecture. Microsoft sought out Inphi in 2013 to solve its data center problem, Cox told IBD. The 100G “long-haul” solution was too costly, power-consumptive and required excess space for metropolitan data transfers. But the 10G “drone” solution wasn’t fast enough. So the duo developed ColorZ, which is an industry first, according to Inphi CEO Ford Tamer. ColorZ is slated to deploy in Q3. Seymore expects Microsoft to account for 5% of Inphi’s Q4 and 2017 sales. The new product will drive growth, Seymore wrote. Linking data centers to amass cloud size — and speed — is becoming increasingly necessary. Cloud users like Apple, Alphabet ( GOOGL ), Amazon and Facebook have all expanded their online operations, Cox said. Chipmakers such as Intel ( INTC ), Qualcomm ( QCOM ), Broadcom ( AVGO ), Nvidia ( NVDA ) and Integrated Device Technology ( IDTI ) have redoubled their data-center efforts in the past year to increase share. But Tamer says they’re at least 18 months behind Inphi. Seymore increased his 2016 estimates for Inphi to $300 million in sales and $1.37 earnings per share ex items, up 34% and 33%, respectively, vs. 2015 metrics. For 2017, he now expects $370 million and $1.70. The consensus of 12 analysts polled by Thomson Reuters forecasts $290.7 million and $1.26 for 2016, and $357.7 million and $1.62 for 2017.