In operation for approximately two decades, fabless semiconductor company MoSys, Inc. (MOSY) has an impressive history of developing and selling integrated circuits (ICs), together with its subsidiaries, for high-speed cloud networking, communications, security appliances, video monitors, and the computing markets. The stock has gained 122.1% over the past six months to close yesterday’s trading session at $3.22. However, it has declined 13.4% over the past month.

However, given the increasing applicability of semiconductors, MOSY is expected to generate significant returns in the long-term as the demand for semiconductors continues to rise.

The company’s management has acknowledged that it expects semiconductor supply constraints to continue to impact its customers in the second quarter and anticipates returning to more normal order and delivery levels in the second half of fiscal 2021.

Click here to checkout our Semiconductor Industry Report for 2021

So, here are the factors that we think could influence MOSY’s performance in the coming months:

Positive Developments

MOSY expanded its patent portfolio in April 2021 through the purchase of five patents around search and classification algorithms. The company launched its LineSpeed Flex 100G PHY IC devices in high-volume, production-ready quantities on February 23. They include 100G Gearbox, Multi-Link Gearbox, Protocol Independent Retimer, and additional Multiplexing/Demultiplexing and Redundant Link functions.

In January, it collaborated with Arrow Electronics, Inc. (ARW)  to allow ARW to sell MOSY’s QPR Memory and Bandwidth Engine memory products and solutions that work with Intel Corporation (INTC) and Xilinx, Inc.’s (XLNX) FPGAs.

Mixed Financials

For the fiscal first quarter ended March 31,  MOSY’s net revenue was  $1.34 million, which represents a 6.2% year-over-year increase. Its revenue from its product segment, which accounted for more than 88% of its total revenue, increased 10.3% year-over-year to $1.18 million in the quarter. However, its loss from operations for the quarter was  $1.39 million compared to $1.37 million in the prior-year period. The company’s net loss came in at $1.37 million compared to $1.41 million in the year-ago period. Also,  its net loss per share was  $0.28 compared to $0.61 in the prior-year period.

Poor Profitability

In terms of trailing-12-month net income margin, MOSY’s negative 54.5% compares to a 4.6% industry average. Its trailing-12-month levered free cash flow margin is also negative compared to the 12.5% industry average. Furthermore,  its trailing-12-month return on common equity and trailing-12-month return on total assets are negative compared to the industry 6.7% and 3.2% respective industry averages.

POWR Ratings Don’t Indicate Enough Upside

MOSY has an overall C rating, which equates to Neutral in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight different categories. MOSY has a C grade for Quality, which is consistent with its lower-than-industry profitability ratios.

It also has a C grade for Momentum, which is in sync with its 122.1% gains over the past six months and 13.4% loss over the past month. The stock has a D grade for Sentiment, which is justified given the unfavorable analyst sentiment.

In addition to the POWR Ratings grade we’ve  just highlighted we’ve also graded MOSY for Growth, Value and Stability. Get all the MOSY ratings here.

MOSY is ranked #81 of 98 stocks in the B-rated Semiconductor & Wireless Chip industry.

Better than MOSY: Click here to access several top-rated stocks in the same industry.

Bottom Line

Semiconductor company MOSY delivered  multiple new designs for its IC products and expanded its product portfolio in the first quarter, but it failed to generate income. The company’s operations are expected to be impacted in the near-term also given the supply constraints. As a result, we think it  wise to wait for a better entry opportunity in the stock.

Click here to checkout our Semiconductor Industry Report for 2021

MOSY shares were trading at $2.96 per share on Tuesday morning, down $0.26 (-8.07%). Year-to-date, MOSY has gained 21.31%, versus a 10.35% rise in the benchmark S&P 500 index during the same period.

About the Author: Manisha Chatterjee

Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More...

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