Credo Technology has emerged to take the crown as TD Cowen's top small- and mid-cap stock pick after a red-hot start to the year. The investment firm upgraded the tech company to buy from hold. Analyst Matthew Ramsay also upped his price target for the stock to $35 from $24, implying that Credo shares could rally 28% from Monday's close.
Credo, which specializes in ethernet connectivity services, has soared 49% in 2024. Ramsay thinks there's even more upside ahead. CRDO YTD mountain Credo YTD chart "A key enabler of higher line-rate speeds, especially beyond 800G, we have been advocates of the technology and the engineers at Credo while maintaining a balanced view on the stock," Ramsay wrote.
"However, with the model likely to inflect beginning F2H25 (JanQ), we come off the sidelines — we upgrade to Buy, and name Credo our Best Smidcap Idea as revenue accelerates and broadens across programs and products." The analyst pointed to a likely near-term inflection in the company's top line. Specifically, he thinks that Credo's revenue could inflect in the second half of its fiscal year as a number of its programs begin to ramp, including some GenAI buildouts.
Credo's key program ramps within its active electrical cables at Microsoft and Amazon should also play a role in pushing the company's fundamentals higher. "Credo's growth is likely to be primarily product-based (though IP remains a key part of its overall portfolio) and is likely to be driven first by its Active Electrical .
