Shares of video technology expert Pixelworks (PXLW -2.13%) soared on Tuesday thanks to a bullish analyst report. The stock rose as much as 26.4%, closing the day's action 24.6% higher.
Roth Capital analyst Suji Desilva reiterated his buy rating on Pixelworks, boosting his price target from $5 to $10 per share. Desilva had a meeting with Pixelworks CFO Elias Nader and CEO Todd DeBonis, and he walked away with a stronger conviction in the company's business prospects. In particular, the Roth analyst appreciated the "differentiated and sustainable" hardware and software combination that Pixelworks brings to the game in high-end smartphone platforms, which should help its customers optimize their flagship phones for better gaming and video viewing experiences.
Desilva's rosy report was an abrupt change from Colliers analyst Derek Soderberg's downgrade last Thursday. That bearish analysis focused on the strong gains of Pixelworks' stock in recent weeks. These shares are indeed crushing the market right now, posting a gain of 120% year to date and setting fresh multiyear highs on a regular basis.
Both of these dueling analysts actually make sense today. Yes, Pixelworks is rolling out its visual processing technology across many upcoming phones from brands such as OnePlus, Oppo, ASUS, and TCL. Pixelworks' future revenue trends haven't looked this healthy since 2004. On the other hand, the stock has delivered some massive gains in recent months, more than doubling in August.
This is an exciting company, and I like the potential its technology solutions might unlock if the customer list keeps growing. I'm also encouraged by the company's squeaky-clean balance sheet, which holds $23.6 million of cash reserves and no debt to speak of.
If I had to pick a winner in this episode of Dueling Analysts, I'd side with the bullish view of Suji Desilva. This little stock might be going places.