Key Highlights

  • Vicor shares are trading at $323.99 in pre-market activity, up 12.13% from Wednesday's close of $288.94.
  • The company raised its third-quarter sequential growth guidance from more than 20% to more than 30% on higher royalties from its first non-exclusive Vertical Power Delivery license.
  • It is the second guidance increase this month, following an initial forecast of about 10% sequential growth at the July Earnings report.
  • A brokerage lifted its price target to $350 from $320 and kept a Buy rating.

Second Guidance Hike in a Month Fires Up the Shares

Vicor (NASDAQ:VICR) is drawing heavy pre-market buying after the company disclosed, in a release issued after Wednesday's close, that its third-quarter outlook is stronger than it said earlier this month. Sequential Revenue growth is now expected to exceed 30%, up from the more than 20% it had guided to.

The company attributed the raise to higher Royalty income from its first non-exclusive license of Vertical Power Delivery technology. At the July earnings report, it had guided to roughly 10% sequential growth for the quarter.

A Power Modules Maker Turning Patents Into Royalties

Vicor, founded in 1981 and based in Andover, Massachusetts, designs and sells modular power components and complete power systems used in high-performance computing, artificial intelligence, aerospace and defense, industrial automation and electric vehicles. Its patented technologies support an expanding licensing Business aimed at hyperscalers and equipment makers that want Supply chain assurance.

In the second quarter, Vicor reported revenue of $143.4 million, up 26.9% sequentially, including $15 million of royalty revenue from its first licensing agreement. Management has cautioned that additional licensing agreements may not arrive until a second International Trade Commission case reaches a final determination in 2027.

Long-Term Targets Hinge on a Second Fab

In July, Vicor updated its long-term financial targets to $2.5 billion in revenue at 70% gross margins and 40% operating income. Management said reaching those levels will require a second chip fabrication facility, with site selection expected to be finalized within weeks at the time.

That ambition explains why investors are paying such close attention to every royalty-driven guidance change.

October 20 Earnings Report Will Test Royalty Durability

Shares have traded between $38.92 and $382.65 over the past 52 weeks and now sit at roughly 93 times trailing earnings, a valuation that leaves little room for disappointment. A brokerage recently raised its price target to $350 from $320 while keeping a Buy rating, and other firms with Buy ratings carry higher targets.

Investors are now weighing how durable the royalty stream is ahead of the company's next earnings report on October 20.