Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of data storage specialist Mellanox Technologies
So what: Mellanox's first-quarter beat was so wide -- adjusted EPS of $0.51 versus the consensus of just $0.34 -- that a swarm of analysts are being forced to significantly raise their growth expectations. Revenue even soared 61% to a company record of $88.7 million, suggesting that the demand tailwinds working in Mellanox's favor are particularly strong right now.
Now what: Expect the operating momentum to continue. "Our strong quarterly revenue growth reflects the increased penetration of our high-performance InfiniBand and Ethernet interconnect solutions in new markets," said CEO Eyal Waldman. "The recent launch of Intel Romley- and Sandy Bridge-based server and storage platforms has created a significant industry upgrade and end-user demand for high-performance interconnects." With the stock shooting through its 52-week high and trading at a forward P/E of 35-ish, however, I'd wait for a much larger margin of safety before buying into that bullish talk.
Interested in more info on Mellanox? Add it to your watchlist.
