Key Takeaways
- Shares of CRDO fell approximately 30% following fiscal year optical products guidance of $600m+ that fell short of market expectations
- First quarter FY27 revenue reached $479m, representing 115% year-over-year growth and exceeding analyst projections
- California State Teachers Retirement System expanded its holdings by 28,062.9%, accumulating approximately 36.38% ownership
- Analyst consensus stands at “Moderate Buy” with average price targets reaching $267.39
- Shares currently trade near $170, representing nearly 50% discount from the 52-week peak of $308.67
Shares of Credo Technology commenced trading on Tuesday at $170.57, marking a steep 45% decline from the 52-week high of $308.67, as the stock endured a devastating two-day rout that erased approximately 30% of market capitalization in the aftermath of its quarterly results.
Credo Technology Group Holding Ltd, CRDO
The financial performance itself exceeded expectations. During the period ending August 1, CRDO delivered revenue of $479m, representing 114.7% year-over-year expansion and surpassing the Wall Street consensus of $473.3m. The company reported earnings per share of $1.20, beating analyst forecasts of $1.17.
The catalyst for the sharp decline was the company’s forward-looking outlook for optical products, which management pegged at $600m or higher for the full fiscal year. Market participants had anticipated more robust projections, triggering the substantial equity repricing.
While shares plummeted, at least one prominent institutional player saw opportunity. The California State Teachers Retirement System dramatically expanded its CRDO holdings by 28,062.9% during the second quarter, acquiring an additional 67.6 million shares. CalSTRS currently maintains approximately 67.84 million shares valued at roughly $18.45 billion, constituting 36.38% of outstanding equity.
Institutional ownership of CRDO totals 80.46% of all shares. Multiple smaller investment firms also expanded their positions throughout the second quarter, including Greenland Capital Management, Ameritas Advisory Services, and HB Wealth Management.
Street Maintains Elevated Price Objectives
Sell-side analysts have not retreated from their bullish stance. The overall rating consensus remains “Moderate Buy,” with the mean 12-month price objective sitting at $267.39, suggesting potential appreciation of approximately 57% from present levels. Certain firms have established even more aggressive targets, with both TD Cowen and Barclays assigning $300 price objectives in recent coverage updates.
Evercore established a $292 price target on September 2, immediately following the earnings release. Mizuho maintains an “outperform” rating alongside a $290 target. Zacks Research downgraded the stock from “strong buy” to “hold” during August, though this represents a minority view.
The trailing P/E ratio currently registers at 60.70 based on recent trading prices. Forward-looking multiples appear more attractive. Analysts project earnings per share of $6.25 for FY27 and $9.56 for FY28, translating to forward P/E ratios of approximately 27 and 18 respectively. The PEG ratio currently measures 0.68.
Executive Trading Activity Under Scrutiny
Regarding insider transactions, Chief Financial Officer Daniel Fleming divested 7,580 shares at $245.88 on July 8, while Chief Operating Officer Yat Lam sold 55,441 shares at $213.02 on July 31. Both sales occurred pursuant to pre-established Rule 10b5-1 trading arrangements.
Collectively, company insiders have sold 376,784 shares valued at approximately $88.3m during the preceding three-month period. Executive ownership stands at 9.06% of total shares outstanding.
Full-year revenue for FY26, which concluded April 30, totaled $1.3bn, up substantially from $59m five fiscal years earlier. Analyst projections call for revenue of $2.5bn in the current fiscal year and $3.8bn in the following period, driven by persistent AI datacenter infrastructure demand.
CRDO’s 50-day moving average currently sits at $228.81, while the 200-day moving average stands at $189.80. The stock exhibits a beta of 3.22, underscoring its tendency toward amplified volatility in either direction.
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