TLDR
- Evercore ISI initiated Credo Technology (CRDO) with an Outperform rating and a $325 price target, roughly 20% above its record-high close of $271.83 on Friday.
- Evercore projects 100% growth in Credo’s core AEC copper business in 2026, followed by 60% in 2027.
- The firm sees Credo’s optical portfolio reaching 25% of total revenues by 2027, dramatically expanding its addressable market 10x–20x.
- Evercore models $13+ EPS by 2028, implying a 70%+ three-year compound annual earnings growth rate.
- BNP Paribas separately reiterated Credo as a key AI beneficiary, citing a TAM now exceeding $10B — up 3x in just 18 months.
Credo Technology (CRDO) climbed 3.5% on Monday after Evercore ISI analyst Mark Lipacis initiated coverage with an Outperform rating and a $325 price target. That target sits roughly 20% above Friday’s record-high close of $271.83.
Credo Technology Group Holding Ltd, CRDO
The initiation landed on the same day BNP Paribas issued its own bullish note on the company, making for a busy Monday morning for CRDO investors.
Lipacis argued that Wall Street is underestimating how large Credo’s long-term opportunity really is. Right now, most investors see it as a copper-based AI connectivity play — and that framing, Evercore believes, is too narrow.
The firm’s core thesis is that Credo is about to undergo a major valuation re-rating as its optical portfolio gains traction.
“We believe it will be increasingly viewed as a broad copper + optical AI-connectivity play,” Lipacis wrote in a note to clients.
Credo built its reputation by selling complete Active Electrical Cable (AEC) systems — the full cable plus the silicon — rather than standalone chips. It’s now applying that same full-system strategy to optics, rolling out optical DSPs, Silicon Photonics, and its ZFOptics modules.
Evercore’s Numbers Stand Well Above Consensus
Evercore’s financial projections are aggressive by any measure. The firm models 100% growth in Credo’s core AEC copper business in 2026, followed by another 60% jump in 2027.
On the optical side, Evercore expects the new portfolio to accelerate late next year and potentially account for 25% of total revenues by 2027.
The headline number is the 2028 EPS projection: $13+, which implies a compound annual earnings growth rate of over 70% across three years. That’s roughly 40% above what the rest of Wall Street is modeling.
At $325, Evercore argues the stock is actually cheap — putting it at a PEG ratio of just 0.4x based on those 2028 estimates.
BNP Paribas Also Bullish, Sees $10B+ TAM
BNP Paribas analyst Karl Ackerman weighed in separately with his own constructive view. He kept his $275 price target but laid out a detailed case for why Credo’s total addressable market has grown sharply.
“We believe AECs, ZF optical transceivers, silicon photonics, Active LED Cables, and OmniConnect gearboxes expand Credo’s TAM to over $10B — or 3x from Credo’s opportunity just 18 months ago,” Ackerman wrote.
Ackerman also flagged customer diversification as a growing positive. He expects three to four hyperscale customers each representing 10%+ of revenue by fiscal 2027, with neoclouds potentially approaching 20% of sales over time.
Credo is currently involved with five of the six major hyperscalers — believed to include Amazon, Meta, Microsoft, xAI, and Oracle.
BNP also pointed to strong supply chain visibility, with hyperscaler customers providing demand forecasts 12 to 36 months out and firm orders placed three to six months in advance.
Credo’s optical DSP portfolio is on track to surpass $100M in sales in fiscal 2027.
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