Rosenblatt Securities raised its price target on Credo Technology Holding to $235 from $215 on Tuesday, maintaining a Neutral rating as the firm cited improving earnings prospects but lingering execution risks.
The adjustment follows Credo Tech’s fiscal first-quarter results, which showed record revenue of $479 million, up 115% year-over-year and 10% quarter-over-quarter. Non-GAAP net income reached $236.3 million, while earnings per share of $1.20 exceeded Wall Street expectations of $1.16. The company also projected optical revenue to exceed $600 million for the full fiscal year.
Rosenblatt’s new target implies a multiple of 25 times projected fiscal 2028 earnings per share. The firm acknowledged Credo Tech’s strong growth metrics, including gross margins of 68% and a projected compound annual revenue growth rate of 41% for fiscal 2027 through 2029. However, it retained its Neutral rating, citing uncertainty around revenue contributions from partnerships such as ZF Optics and Dust Photonics PIC.
Credo Tech’s stock closed at $226.19 on August 31, down 2.82% for the session, before edging up 0.73% to $227.84 in after-hours trading. The company’s valuation metrics included a trailing P/E ratio of 95.29 and a PEG ratio of 0.11.
Other firms adjusted their targets following the results. BofA Securities lowered its price target to $275 from $340 but kept a Buy rating, while Needham and Stifel both set new targets at $275 and $350, respectively, maintaining Buy ratings. Needham highlighted the July quarter’s revenue strength, driven by active electrical cables and contributions from optical retimers and digital signal processors.
Rosenblatt also flagged concerns over Credo Tech’s discussions around MicroLED expansion in fiscal 2028, calling the outlook "less likely than before." The firm viewed the OmniConnect Gearbox, designed to address memory bottlenecks in AI inference chips, more favorably for fiscal 2028.
Credo Tech is transitioning its growth strategy from active electrical cables to optical solutions, focusing on optical DSPs, silicon photonics PICs, and ZeroFlap Optics to support AI and data center infrastructure.
