Northland: Maywell Technology's deal with Lumentum highlights scarce value of INP devices, favoring related concepts in US stocks

The Zhitong Finance App learned that after MRVL.US (MRVL.US) announced a deal with Lumentum (LITE.US), Northland Capital Markets raised its Coherent (COHR.US) and Applied Optoelectronics (AAOI.US) ratings on Monday.

“Although the rise in the AI optical module sector, fueled by rumors related to Mywell Technology, is fleeting, it highlights one point: for large AI chip vendors, scarce photonic device capabilities are also valuable, in addition to computing and network integrated circuits,” Northland analyst Tim Savageaux wrote in a report to customers. “Although we are still not optimistic about optical modules, Applied Optoelectronics and Coherent's core indium phosphide (InP) device capabilities, combined with a sharp correction in the two companies' stock prices, prompted us to raise our ratings and maintain our respective target prices of $120 and $280, respectively.”

Savageaux upgraded Coherent and Applied Optoelectronics ratings from “Market Perform” (Market Perform) to “Outperform” (Outperform).

He further stated that the deal is equally beneficial to MACOM (MTSI.US) and MaxLinear (MXL.US) in the field of optoelectronic integrated circuits because MACOM has indium phosphide devices. “We still believe that MACOM's photonic capabilities are largely unrecognized by the market, as is MaxLinear's growing position in optical DSPs,” added Savageaux.