Shares of technology company, PMC-Sierra (PMCS), hit a new 52-week high of $9.39 on Dec 31, eventually closing at $9.16. The company delivered one-year as well as year-to-date return of more than 42%. Average volume of shares traded over the last three months was roughly 1,416K.
What is Driving PMC-Sierra?
PMC-Sierra designs, develops, markets and supports semiconductor solutions. The company’s portfolio of semiconductor devices is used in various applications within communications network infrastructure equipment. With more data and video moving onto the global network, PMC continues to develop innovative technologies for global service providers, which in turn drives growth.
The company’s product introductions and design wins, LTE build-out in China, cloud and data center build-outs and increasing storage demand remain solid growth catalysts, going forward.
The price appreciation may also be attributed to the company’s recent partnership with Memblaze Technology Co. Ltd, a flash storage solution provider, to offer high-performance PBlaze4 solid-state drive (SSDs) to hyperscale data centers. This partnership enables PMC to pursue flash opportunities in China's data centers and hyperscale deployments, expanding its share in the storage market.
In fact, the company nearly doubled its cloud data center revenues from 2012 to 2013, and grew faster than the market in 2014 based on a number of design wins and short-term opportunities.
Moreover, the company gained momentum from strong fundamentals and better-than-expected third-quarter results released on Oct 27. Since then, the stock has moved up 27%.
PMC-Sierra’s top line increased 6.9% sequentially and 5.5% from the year-ago period to $135.5 million. The company benefitted from the broad-based strength in the company’s storage products, which generated 72% of third-quarter revenues. Also, non-GAAP earnings came in at 9 cents per share beating the Zacks Consensus Estimate by 2 cents.
Moreover, the Zacks Consensus Estimate for revenues increased 3.2%, while that for earnings jumped 26.1% for fiscal 2014 from the prior year. Additionally, the company has delivered an average earnings surprise of nearly 28.8% over the trailing four quarters. PMC-Sierra’s strong revenue growth, solid financial conditions, increasing market share in server/storage markets and strong long-term growth potential position it favorably.
PMC-Sierra currently has a Zacks Rank #3 (Hold).
Stocks to Consider
Some well-placed stocks in the technology space include Alps Electric Co. Ltd. (APELY), Broadcom Corp. (BRCM) and Nitto Denko Corporation (NDEKY), sporting a Zacks Rank #1 (Strong Buy).
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