To The Moon

1. I own a small amount of $Credo Technology Group Holding Ltd(CRDO)$

2. $Credo Technology Group Holding Ltd(CRDO)$ is a volatile stock.

3. I think $Credo Technology Group Holding Ltd(CRDO)$ about 10-20% lower is where the r/r becomes too good to ignore.

Here's a few reasons why that is true:

-> Should do +$6.50 in EPS in FY27 and ~$10 in EPS in FY28 which is 70% CAGR.

If we trade at ~$130 that means we're trading sub 15x FY28 EPS which considering would be a bargain at 70% growth.

Back when $Credo Technology Group Holding Ltd(CRDO)$ traded at sub $100 it was also trading in the range of sub 15x EPS for FY28 so that's the kind of r/r I'm looking for again.

-> SOTP valuation:

DSP & PIC revenue I suspect to be in the $500M range in FY28 ... ~10-12x sales on that segment in line with an $Broadcom(AVGO)$ multiple gives us ~$5B.

ZeroFlaps should generate ~$800M in FY28 at ~$500 ASP and ~1.6 million units (assuming 2H FY27 ramp up is strong).

7-8x is a more suitable multiple to work from here which gives us $5.6B.

I struggle to see how the optics segment will therefore be valued above ~$12B in FY28 which means you need the AEC business valued +$30B to give you 50% from here.

If the AEC business is generating ~$2.4B (total $3.7B excluding NPO, OmniConnect etc) and that trades ~10x sales you're looking at sub $30B in value from there.

Granted SOTP valuation will always produce a slightly stricter number but I think that's also a fair approach given risks like Dust integration and customer concentration.

TLDR: Imo $Credo Technology Group Holding Ltd(CRDO)$ is a top class company with great management. That doesn't necessarily mean the numbers make it a screaming buy today even after this drop.

One to have very high on a watchlist though if we do see a further compression.