MPWR
Monolithic Power Systems, Inc.
$1,305.65
Platform & Compounding FCF
85%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 101.8% above fair value
You pay
$1,305.65
Bear
$421.82
Fair
$646.85
Bull
$903.53
Bear
$421.82
-67.7%
10% stage 1 growth, 12% discount
Fair
$646.85
-50.5%
16% stage 1 growth, 12% discount
Bull
$903.53
-30.8%
21% stage 1 growth, 12% discount
Key Value Driver
FCF growth rate (16% base case)
Terminal Value % of EV
39%
Implied Market Multiple
127.0x
Market is pricing in (growth)
36.1%
vs 16.2% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $1615.00 from 25 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $646.85 per share.
Warnings
Stock-based employee pay equals 37% of profits. This dilutes existing shareholders, so cash flow alone overstates what owners really earn.
Wall Street's average price target is $1615.00 (from 25 analysts). Our estimate is 80% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions