Credo Technology: It's Just The Beginning

(11min)

Summary

  • My bullish CRDO thesis, initiated Jan 2025, proved prescient as the stock surged post-Q4 FY25, validating calls to buy during its dip and highlighting its massive TAM opportunity.
  • Credo's Q4 FY25 smashed estimates with$170M revenue (+180% YoY) and$0.35 EPS (+27% beat), fueling significant upward revisions for FY26-27 earnings and showcasing strong execution.
  • Impressive Q4 profitability saw gross margins hit 67.4%; FY26 guidance targets $800M in sales with net margins approaching 40%, suggesting substantial EPS upside beyond current consensus.
  • Customer concentration risk is diminishing, with the top client now 61% (down from 84%) and two others above 10%, alongside strong AEC growth and a major optical DSP win.
  • Despite a recent surge, CRDO's 0.43x PEG ratio suggests significant undervaluation; targeting a 1x PEG implies over 132% upside as the company capitalizes on AI-driven demand.
  • Looking for a helping hand in the market? Members of Beyond the Wall Investing get exclusive ideas and guidance to navigate any climate. Learn More »

Wooden blocks spelling "CREDO" on documents, symbolizing principles, values, and corporate philosophy

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My Thesis Update

I initiated my coverage on Credo Technology Group Holding Ltd (NASDAQ:CRDO) with a bullish rating in January 2025, arguing that the CRDO stock's valuation — despite seemingly high multiples — isn't as expensive as many might have

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This article was written by

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Oakoff Investments is a personal portfolio manager and a quantitative research analyst with 5 years helping readers find a reasonable balance between growth and value by sharing proprietary Wall Street information.

He leads the investing group Beyond the Wall Investing with features that include: a fundamentals-based portfolio, weekly analysis on insights from institutional investors, regular alerts for short-term trade ideas based on technical signals, ticker feedback by request from readers, and community chat. Learn more.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of CRDO either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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