Shares of semiconductor connectivity specialist Credo Technology (NASDAQ:CRDO) surged after the company issued a bullish pre-announcement, flagging materially stronger quarterly revenue and lifting its near-term outlook — a move that pointed to rapidly accelerating growth.
Credo said it now anticipates fiscal third-quarter revenue in the range of $404 million to $408 million, sharply higher than its previous forecast of $335 million to $345 million and comfortably above the $341 million consensus estimate.
The stock rallied more than 18% in premarket trading by 07:18 ET.
Looking ahead, Credo also projected mid-single-digit sequential revenue growth for the fiscal fourth quarter. Barclays analysts said this outlook implies year-on-year growth of more than 200% and quarterly revenue of around $425 million, compared with market expectations of roughly $361 million.
Analysts led by Tom O’Malley said the update suggests the recent pullback in the stock had “gone too far,” noting that shares had dropped about 42% from their early-December highs. According to the bank, the upside reflects “a more material contribution from META and the initial ramp from Oracle (customer number 5).”
Incorporating the stronger outlook into its forecasts, Barclays now sees Credo’s earnings approaching $6 in calendar 2027, which would imply a valuation of roughly 21 times earnings based on the prior close. The analysts added that Credo trades at a “35x discount to ALAB, which in our eyes makes little sense.”
“This is the company frustrated with the stock down ~42% since its peak on 12/2, the day after FQ2 earnings, and
looking to send a message,” the team said.
“We expect more substantial beats from here and think the multi pronged bear case around CPO, AEC TAM, and tech transitions is flawed. Aside from NVDA, we think this stock is the most disconnected from true value in our group,” they added.
Barclays reiterated its Overweight rating on the shares and kept its $260 price target unchanged.