Amid the increasing adoption of electric vehicles and automation in the industry, the modular power components provider Vicor Corporation (VICR) has emerged triumphant and foresees long-term opportunities. Notably, on rising acceptance of EVs, Vicor estimates its automotive SAM (Serviceable Available Market) to increase to $29 billion by 2030.
As the lead supplier of 48V power solutions for XPUs in AI/supercomputer applications in the data center, Vicor recently reviewed its growth strategy at its annual shareholder meeting, focusing primarily on the AI computing and auto markets. (See Vicor stock charts on TipRanks)
Detailing the strategy discussed, Needham analyst Quinn Bolton said that in AI computing, Vicor announced two new current delivery design wins, and it also launched its next-generation NBM solution. Furthermore, Vicor’s AI computing SAM is likely to escalate to $2.5 billion by 2025, driven by the rising demand for high-density power delivery solutions, he added.
According to Bolton, in the auto segment, which is engaged with 20 auto OEM (original equipment manufacturers) and tier-one customers, the company has won two OEM designs, which are expected to initiate in 2023. Therefore, based on its vision, management expects its product mix to shift to AP in the third quarter of this year. Currently, the analyst said, “we are modeling AP to generate ~45% of 3Q21 sales. To the extent that AP sales exceed our estimate in 3Q21, we believe there could be upside to our margin estimates.”
The five-star analyst commented, “With its patent-protected revolutionary Factorized Power Architecture that is fundamentally different from conventional voltage regulator architectures, we see Vicor as uniquely positioned to benefit from demand for greater power efficiency, growing power requirements of advanced processors and the transition to 48V architectures in the data center, HPC and automotive markets.”
Additionally, Bolton expects Vicor’s growth rate to exceed 20% in 2021 on the ramp-up of next-generation CPUs, GPUs, FPGAs, and AI accelerators, along with increased adoption of 48V architectures in data center and HPC applications. Furthermore, expansion in the company’s TAM through its NBM and RFM solutions is also likely to contribute to the growth. Overall, the analyst anticipates “strong revenue growth to drive an expanding GM.”
Therefore, based on growth expectations, Bolton maintained a Buy rating and a price target of $110 (5% upside potential) on the stock.
On TipRanks, Vicor is a Moderate Buy based on 2 Buy and 1 Hold ratings. The average Vicor price target of $107 implies upside potential of 2.1% from the current levels. Vicor shares have increased around 46% over the past year.
TipRanks’ Hedge Fund Trading Activity tool shows that confidence in Vicor is currently Positive, as the cumulative change in holdings across 2 hedge funds that were active in the last quarter displayed an increase of 90,300 shares.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your analysis before making any investment.
