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MACOM (MTSI) Acquires Linearizer, Expands Product Portfolio

MACOM Technology Solutions MTSI has acquired Linearizer Communications Group ("LCG") for $49 million.

LCG is well-known for correcting distortion in communications systems and linear optical links. Moreover, the company focuses on non-linear microwave predistortion and high-performance microwave photonic solutions.

We note that MACOM’s component and subsystem design capabilities are likely to get enhanced upon the completion of the underlined buyout.

This, in turn, is expected to expand its end-market exposure, especially in the industrial and defense markets. Moreover, with LCG’s robust solutions, MACOM remains well-poised to gain solid momentum across terrestrial, avionic and space-based applications.

MACOM Technology Solutions Holdings, Inc. Price and Consensus

MACOM Technology Solutions Holdings, Inc. Price and Consensus
MACOM Technology Solutions Holdings, Inc. Price and Consensus

MACOM Technology Solutions Holdings, Inc. price-consensus-chart | MACOM Technology Solutions Holdings, Inc. Quote

Growth Prospects

The LCG acquisition is expected to expand MACOM’s footprint in the booming photonic solutions market.

According to a report from Fortune Business Insights, the global photonics market is expected to reach $1.3 trillion by 2028, at a CAGR of 6.7% between 2021 and 2028.

Per a Mordor Intelligence report, the market is anticipated to hit $1.1 trillion by 2027 at a CAGR of 7.5% between 2022 and 2027.

Notably, MACOM’s strong prospects, in this promising market on the back of the underlined acquisition, will likely aid its financial performance in the near future. Also, the prospects are expected to aid MTSI in winning investors’ confidence.

Coming to the price performance, MACOM has gained 20.5% in the past year, outperforming the industry’s growth of 12.9%.

Portfolio Strength

The latest move bodes well for the company’s growing efforts toward expanding its product portfolio.

Apart from LCG, MACOM recently signed a definitive agreement to buy the assets and operations of OMMIC SAS. Notably, this acquisition is expected to drive MACOM’s momentum in microwave applications across the telecommunications, industrial, and aerospace and defense markets. Further, it will boost MACOM’s wafer production capability.

Moreover, MTSI’s footprint in the European markets is expected to get strengthened upon the completion of the buyout.

In addition to strategic acquisitions, MTSI recently unveiled a 226Gbps per lane technology product family that comprises transimpedance amplifiers, MATA-40734 and MATA-40736, externally modulated laser driver, MAOM-011112 and a photodiode, MARP-BP112. Notably, the new product family aids the development of 1.6TB optical modules.

In addition, MTSI keeps bringing reliable and efficient technologies to provide better solutions to customers.

We believe that MACOM’s portfolio strength will continue to help it sustain momentum among customers.

Zacks Rank & Stocks to Consider

Currently, MACOM carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector are Arista Networks ANET, Agilent Technologies A and AMETEK AME. While Arista Networks sports a Zacks Rank #1 (Strong Buy), Agilent and AMETEK carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Arista Networks shares have gained 22.7% in the past year. The long-term earnings growth rate for ANET is currently projected at 14.17%.

Agilent shares have gained 4.9% in the past year. A’s long-term earnings growth rate is currently projected at 12%.

AMETEK shares have gained 9.8% in the past year. The long-term earnings growth rate for AME is currently projected at 8.81%.

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