Lattice Semiconductor Corp: 5G Stock Rips to Record Level on Strong Q3 Results

Lattice Semiconductor Stock Continues to Shine

Lattice Semiconductor Corp (NASDAQ:LSCC) is one of the most compelling—and seemingly overlooked—5G stocks around. During the so-called September slide, when the Nasdaq tumbled by 5.6%, LSCC stock climbed by five percent.

But buy-and-hold Lattice Semiconductor stock investors are all too familiar with the company’s market-trouncing gains. In spite of some analysts repeatedly saying that LSCC stock is getting ahead of itself and warning of a correction, shares of Lattice Semiconductor Corp continue to trend significantly higher.

I last wrote about Lattice Semiconductor stock in August, when it was trading around $58.25. At the time, the average 12-month share price projection by Wall Street analysts was a paltry $59.25, with a high estimate of $68.00.

In light of the burgeoning 5G industry, Lattice Semiconductor Corp’s record second-quarter results, and strong business outlook, I thought those projections were far too low. I believed a 12-month share price forecast of $76.00 for LSCC stock was much more reasonable.

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It turns out that even my aggressive target was a little light. After the company reported strong third-quarter results, investors sent shares of Lattice Semiconductor Corp considerably higher, to a new 52-week high of $82.47 on November 4.

Yet again, Wall Street analysts’ 12-month projection for Lattice Semiconductor stock is a little underwhelming, with an average price target of $76.17 and a high estimate of $95.00. This points to potential downside of two percent and upside of 16.5%, respectively.

In my view, those projections continue to miss the mark. A 12-month share-price forecast of $117.00 for Lattice Semiconductor Corp seems reasonable. Time will tell.

As of this writing, LSCC stock is up by:

  • 28% over the last month
  • 41% over the last three months
  • 71% over the last six months
  • 78% year-to-date
  • 114% year-over-year

Huge gains, indeed.

And it’s not a one-time fluke of Lattice Semiconductor stock taking advantage of the recovery from the March 2020 stock market. LSCC stock has been outperforming the market for the last three years. Over that time, shares of Lattice Semiconductor Corp have soared by 1,218%.

Those market-trouncing gains have come on the heels of consistently strong financial results and guidance.

Chart courtesy of StockCharts.com

LSCC Stock Overview

Lattice Semiconductor is the leading provider of programmable smart-connectivity technology. It’s the world’s largest supplier of low-power field-programmable gate array (FGAP) products by volume.

The company helps its more than 8,000 global customers implement their own designs, create lower development costs, and improve overall time-to-market. (Source: “Corporate Overview: August 2021,” Lattice Semiconductor Corp, last accessed November 12, 2021.)

The company also provides intellectual property (IP) licensing and various other services.

Lattice Semiconductor has a strong foothold in a number of lucrative markets, including communications (5G wireless, switches/routers), computing (servers, client), industrial (Internet of Things, factory automation), automotive (infotainment, advanced driver assistance), and consumer (smartphones, wearables, smart homes, etc.).

Lattice Semiconductor Corp’s customers include Amazon.com, Inc. (NASDAQ:AMZN), Cisco Systems Inc (NASDAQ:CSCO), Samsung Electronics Co Ltd. (KRX:005930, OTCMKTS:SSNLF), and Sony Group Corp (NYSE:SONY).

Another Great Quarter of Results

For the third quarter ended October 2, Lattice Semiconductor announced that its revenue increased by 28% year-over-year and five percent sequentially to $131.9 million. This represents its third quarter of double-digit growth. (Source: “Lattice Semiconductor Reports Third Quarter 2021 Results,” Lattice Semiconductor Corp, November 2, 2021.)

The company’s net income climbed by 112% year-over-year and $22.5% sequentially to $26.7 million, or $0.19 per share. Its adjusted net income improved by 49% year-over-year and 12.5% sequentially to $39.6 million, or $0.28 per share.

Business Outlook

For the fourth quarter of 2021, Lattice Semiconductor Corp expects to report:

  • Revenue between $129.0 and $139.0 million, compared to $107.0 million in Q4 2020
  • A gross margin of 64% (plus or minus one percent on an adjusted basis), compared to 60.5% in Q4 2020
  • Total operating expenses between $44.0 and $46.0 million on an adjusted basis, compared to $37.5 million in the same period last year.

Analyst Take

Lattice Semiconductor Corp is a 5G stock that continues to get better and better.

Even in 2020, a year with a ravaged economy, Lattice Semiconductor stock advanced 140%. That momentum has continued in 2021, with LSCC stock up by 78% so far this year.

Thanks to strong guidance and 5G technology continuing to gain traction, Lattice Semiconductor stock is poised for additional gains over the coming years.