Stifel reiterates Credo Tech stock Buy rating ahead of earnings

Stifel has reasserted a Buy rating on Credo Tech (NASDAQ:CRDO) shares, along with a $350.00 price target. The stock presently trades at $230.57, which has experienced an 18.5% decline over the past week, yet it has achieved an impressive 102% gain over the past year. The investment firm anticipates Credo surpassing the estimated $472.1 million revenue for the July quarter, as it anticipates $470.0 million, reflecting a 7.6% quarter-over-quarter increase.

Moreover, Stifel believes Credo will outperform the expected non-GAAP earnings per share of $1.17, with its projection at $1.20. The firm sees potential upside stemming from advances in AEC across numerous hyperscalers, the ramping of optical products, and scaling activities likely to commence during the first half of fiscal 2027.

Stifel is optimistic about Credo's prospects due to the company's impressive gross profit margins of 68% and revenue growth that has surpassed 200% over the last 12 months. The firm perceives Credo's valuation as having reset while estimates have increased, resulting in an enhanced entry point ahead of potential upside to its more than 80% growth outlook for fiscal 2027.

Stifel's price target is calculated on the assumption of a 42.9 times calendar year 2027 price-to-earnings multiple.