Vicor Corporation

VICR Details

Vicor Corporation (NASDAQ: VICR) is engaged in the design and development of electrical power conversion equipment. The company has licensed its intellectual property and earns periodic royalties by sharing it with Original Equipment Manufacturers (OEMs) and Original Design Manufacturer (ODMs). The company deals in two segments namely, 1) Brick Products, which largely consists of DC-DC converters as well as components providing AC line rectification, power factor correction, and transient protection, 2) Advanced Products, which consist of Factorized Power Architecture (FPA), Vertical Power Delivery, and continue to research in the development of power systems. As of April 29^th, 2021, the company’s market capitalization stood at USD 4.07 billion.

Autonomous Security Robot Developer choose Vicor: As of April 15^th, 2021, Knightscope Inc, a developer of advanced robots, announced that it has selected Vicor to make its 5th generation Autonomous security Robots (ASRs). They further informed that Vicor's high-performance power modules will help to achieve the efficiency needed for this robot.

Boeing Satellites use Vicor’s power modules: As of January 5^th, 2021, the company announced its first radiation-tolerant DC-DC convertor power module. It is being used by Boeing and is found to be invulnerable to a single event upset. High-end commercial satellites require high power and low noise features so that it does not get disturbed by the intense radiation present in the atmosphere.

Q1FY21 Results: The company reported a 40.05% rise in net revenue to USD 88.79 million in Q1FY21 (ending March 31, 2021) as compared to USD 63.40 million in Q1FY20 (ending March 31, 2020). The company reported an increase in net income to USD 15.09 million in Q1FY21 as compared to a loss of USD 1.73 million in Q1FY20. Cash flow from operations stood at USD 17.60 million in Q1FY21 as compared to USD 0.90 million cash used for operation in Q1FY20.

Key Risks: The company’s revenue from its Advanced products segment comes from a handful of clients. If the company loses these customers, it will result in a significant decline in revenues for the company. It could also impact the financial as well as operational health of the company.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Data Source: Refinitiv, Thomson Reuters, Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company’s FY21E trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

VICR Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Stock Recommendation: VICR has already surged 4.62% in the past three months and is currently trading at a higher end of the 52-week range of USD 50.14 to USD 104.68. The stock is currently trading above the 200 DMA levels. We have valued the stock using the EV/Sales based relative valuation methodology and arrived at a target price of USD 104.26. Considering the minor rise in the stock price in the past three-month, latest developments, strong margins and decent fundamental growth, we recommend a “Buy” rating on the stock at the closing price of USD 93.75, up by 0.59% as of 29^th April 2021.