Takeaways from MWC Las Vegas 2022
We met with Peraso’s (PRSO) CEO Ron Glibbery at MWC Las Vegas. At the event, Peraso showcased its 60 GHz mmWave devices and modules and its new mmWave Beamformer IC targeted at customer premise equipment (CPE) for licensed 5G spectrum. We believe the company’s 60 GHz volumes continue to ramp with existing customers, and opportunities abound for additional design wins. As for the new Beamformer IC, interest from prospective customers remains high, and our sense was that Peraso’s addressable market may be expanding following the conclusion of India’s 5G spectrum auction in August and the country’s anticipated launch of 5G services this month. Domestically, management expects the Tier 1 carriers to increasingly rely on mmWave spectrum to support new services such as fixed wireless access (FWA) given the exponential growth in data volumes. Considering that businesses and homes currently consume significantly more data over broadband connections than via mobile plans, the mid-band spectrum being deployed today could quickly be exhausted. As such, the major carriers may eventually dedicate their mid-band spectrum to serving their mobile customers, while leveraging mmWave spectrum for FWA and other bandwidth intensive applications. The implication here is that mmWave spectrum deployments may begin in the latter half of 2023 or 2024, so Peraso could start to secure 5G CPE design wins in 2023 with production ramping late in the year.
Near-term, we remain comfortable with our estimates for Q3 and FY ’22. Although there have been rumblings of softening demand for semiconductors, Peraso’s backlog remains robust, and the company has not experienced any cancellations. Additionally, as wireless internet service providers (WISPs) like Starry have finally begun to see their Rural Digital Opportunity Fund (RDOF) funding applications approved, we believe Peraso and other suppliers to the WISPs are likely to benefit. Our lone concern at present remains Peraso’s need for capital amid challenging capital market conditions. That said, we remain optimistic that as management delivers against its revenue targets and announces new design wins, shares of PRSO will better reflect the company’s long-term growth potential and will be valued at levels more consistent with high growth, early-stage semiconductor companies. We reiterate our price target of $4.00 based on a FY ’23 EV/Sales multiple of approximately 3x.
Our report with model and disclosures is available here.
Disclosure(s):
K. Liu & Company LLC (“the firm”) receives or intends to seek compensation from the companies covered in its research reports. The firm has received compensation from Peraso Inc. (PRSO) in the past 12 months for “Sponsored Research.”
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