Needham reiterated its Buy rating and $275 price target on Credo Technology Holding (NASDAQ: CRDO) following the company’s fiscal first-quarter results and an upgraded outlook for optical revenue growth.
The firm maintained its bullish stance as Credo reported earnings of $1.20 per share on revenue of $479 million, exceeding Wall Street expectations. Revenue surged 115% year-over-year and 10% sequentially, with total growth over the last twelve months reaching 206%. Gross profit margins stood at 68%, supported by demand for active electrical cables, retimers, optical DSPs, silicon photonics PICs, and ZeroFlap Optics.
Needham’s $275 target is based on approximately 28 times its calendar 2028 non-GAAP EPS estimate. The stock was trading at $206.63, down 8.77% over the past week but up 66% over the prior year.
BofA Securities adjusted its price target to $275 from $340 while keeping a Buy rating, while Stifel reiterated its Buy rating with a $350 target. Credo’s near-term growth is driven by the proliferation of active electrical cables and rising optical revenues.
Management projected total revenue growth of more than 85% for fiscal 2027, with optical revenues expected to exceed $600 million. The company anticipates contributions of over $100 million from ZF Optics, DSPs, and PICs, with an inflection in optical revenue anticipated in the second half of fiscal 2027.
Eight-hundred-gigabit AEC demand is expected to persist through fiscal 2027, with initial 1.6-terabit revenue slated for the second half of the year and a more substantial ramp in fiscal 2028. Credo works with five hyperscalers and is expanding engagements with neocloud customers, positioning its PIC product as a key supplier for emerging NPO/CPO platforms.
