Key Highlights
- Shares of CRDO have gained 18.8% following the latest quarterly earnings, significantly outpacing the S&P 500
- Fourth quarter fiscal 2026 revenue jumped 157% year-over-year, reaching $437 million and exceeding Wall Street projections
- Adjusted EPS of $1.16 surpassed analyst expectations of $1.03, representing a 12.6% beat
- Company leadership forecasts over 80% revenue expansion in fiscal 2027, projecting optical segment sales above $600 million
- Wall Street consensus stands at Buy with an average target price of $263.11
Credo Technology Group (CRDO) has delivered an impressive 18.8% gain since releasing its most recent quarterly results, trading at $241.91 as of Friday’s market open. This performance has substantially outpaced the broader S&P 500 index during the corresponding timeframe.
Credo Technology Group Holding Ltd, CRDO
The driving force behind this rally was the company’s fourth quarter fiscal 2026 performance. Total revenue reached $437 million, representing a 157% year-over-year increase and surpassing the Street’s expectation of $430.1 million. Adjusted diluted earnings per share registered at $1.16, topping the consensus forecast of $1.03 by 12.6%.
Executive leadership highlighted a remarkable milestone: fourth quarter revenue by itself surpassed the company’s complete fiscal 2025 annual revenue. This dramatic acceleration reflects the rapid expansion of AI infrastructure investments flowing through CRDO’s sales pipeline.
For the complete fiscal 2026 period, revenues exceeded $1.3 billion, representing more than a tripling from the prior year. The company’s customer concentration includes four hyperscale clients, each representing at least 10% of total sales, with the top three accounting for 34%, 27%, and 16% respectively.
Adjusted gross margin stood at 68.3% during the quarter, improving from 67.4% in the year-ago period. Net margin reached 51.9%, while free cash flow achieved a company record of $177.5 million. The quarter concluded with $1.4 billion in cash and short-term investments on the balance sheet.
Looking ahead to Q1 fiscal 2027, company guidance calls for revenue between $465 million and $475 million. For the complete fiscal year, management is projecting revenue growth exceeding 80%, with the optical business segment anticipated to generate more than $600 million.
Optical Segment Emerges as Major Growth Driver
The company’s expansion in optical technology received a significant boost through its acquisition of Dust Photonics. This strategic transaction brings silicon photonics PIC capabilities into the fold and expands the product lineup to include 800G and 1.6T solutions, with 3.2T products currently under development.
Executive guidance indicates that ZeroFlap optics, silicon photonics PICs, and optical DSPs will each generate revenues exceeding $100 million during fiscal 2027.
Analyst projections have undergone notable upward revisions over the past month. Consensus EPS estimates have increased by 18.12% since the earnings announcement. Zacks currently assigns CRDO a Rank #1 (Strong Buy) rating.
Institutional Holdings and Insider Transactions
Major institutional investors have been actively accumulating shares. Vanguard, State Street, and Geode each increased their positions during Q4. Alliancebernstein expanded its stake by 66% in Q2. Current institutional ownership represents 80.46% of outstanding shares.
Recent insider transactions have attracted market attention. CFO Daniel W. Fleming executed a sale of 40,000 units on June 11 at an average price of $249.48, generating approximately $9.98 million in proceeds. This transaction occurred under a pre-established Rule 10b5-1 trading plan designed to address tax liabilities associated with equity compensation vesting. CTO Chi Fung Cheng sold 27,500 units in April through a comparable arrangement.
Representative Gilbert Ray Cisneros, Jr. also reported a disposal valued between $1,001 and $15,000 in CRDO shares on June 30.
Street sentiment remains decidedly bullish. Evercore launched coverage with an Outperform rating and established a $325 price target on June 22. JPMorgan elevated its target to $250 while maintaining an Overweight stance.
The Street consensus target stands at $263.11 based on coverage from 19 analysts, with 17 maintaining Buy or Strong Buy recommendations and two rating the stock at Hold.
CRDO’s 52-week trading range spans from a low of $86.49 to a high of $308.67.
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