Lattice Semiconductor Stock Could More Than Double From Tech Stock Sell-Off Level

Lattice Semiconductor Corp Bullish on Strong Guidance

The stock market is a forward-looking indicator. A company can post great financial results but an underwhelming guidance and, more often than not, its share price will fall. This isn’t the case with Lattice Semiconductor Corp (NASDAQ:LSCC), an overlooked 5G company that continues to report excellent results and provide robust guidance.

The only downside right now is that tech stocks have been selling off on concerns about rising interest rates, inflation, microchip shortages, and growing calls for a major recession.

This has sent much of the tech stock market into the red. As of this writing, the iShares Semiconductor ETF (NASDAQ:SOXX) is down by 26% year-to-date and 7.6% year-over-year.

Lattice Semiconductor stock’s performance has also been underwhelming. LSCC stock is down by:

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  • 24% month-over-month
  • 38% year-to-date
  • 12% year-over-year

These dismal numbers have nothing to do with what’s been going on at Lattice Semiconductor Corp. Under so-called normal circumstances, Lattice Semiconductor stock would likely be ripping higher.

Earlier this year, the company reported wonderful fourth-quarter results. Lattice Semiconductor Corp’s management also did what it normally does, provide strong guidance, saying the company should report first-quarter 2022 revenue growth of approximately 27%.

Wall Street analysts see the potential in LSCC stock that many investors have overlooked. Of the analysts providing a 12-month price target for Lattice Semiconductor stock, their average estimate is $79.50 and their high estimate is $95.00. This points to potential gains of 68% to 101%. Even their low estimate of $68.00 supports potential gains of 44%.

Chart courtesy of StockCharts.com

About LSCC Stock

From the edge to the cloud, Lattice Semiconductor solves the biggest communications, data center, industrial, automotive, and consumer challenges. (Source: “Lattice Semiconductor Reports Fourth Quarter and Full Year 2021 Results,” Lattice Semiconductor Corp, February 15, 2022.)

The company is the leading provider of low-power, programmable, smart-connectivity technology. Basically, the company helps its customers implement their own designs, create lower development costs, and improve overall time-to-market.

Lattice Semiconductor Corp serves blue-chip clients in growing end markets such as communications (5G wireless, switches/routers), computing (servers, client), industrial (Internet of Things, factory automation), automotive (infotainment, advanced driver assistance), and consumer and broadcasting (smartphones, wearables, smart homes). (Source: “Corporate Overview: February 2022,” Lattice Semiconductor Corp, last accessed April 28, 2022.)

The company’s growing and enviable list of customers includes Alphabet Inc (NASDAQ:GOOG), Amazon.com, Inc. (NASDAQ:AMZN), Canon Inc (NYSE:CAJ), Cisco Systems Inc (NASDAQ:CSCO), HP Inc (NYSE:HPQ), Lockheed Martin Corporation (NYSE:LMT), Microsoft Corporation (NASDAQ:MSFT), and Raytheon Technologies Corp (NYSE:RTX).

Great Q4 Results & Strong Outlook

For the fourth quarter of fiscal 2021 ended January 1, 2022, Lattice Semiconductor announced that its revenue increased by 32.3% year-over-year and 7.5% sequentially to $141.8 million. Analysts were expecting $133.6 million. (Source: Lattice Semiconductor Corp, February 15, 2022, op. cit.)

The company’s fourth-quarter net income went up by 87.5% year-over-year and 6.7% sequentially to $28.5 million, or $0.20 per share. Its adjusted net income rallied by 64.7% year-over-year and 14.5% sequentially to $45.3 million, or $0.32 per share. Wall Street was looking for adjusted earnings of $0.27 per share.

Lattice Semiconductor has topped analyst expectations for revenue and earnings in each of the last four quarters. Moreover, the fourth quarter of 2021 was the company’s fourth consecutive quarter of double-digit year-over-year growth.

For the first quarter of 2022, Lattice Semiconductor Corp expects to report:

  • Revenue between $141.0 and $151.0 million, compared to $115.0 million in Q1 2021
  • A gross margin percentage of 66% (plus or minus one percent) on an adjusted basis, compared to 60.1% in Q1 2021
  • Total operating expenses between $46.0 and $48.0 million, on an adjusted basis, compared to $49.9 million in the same period of the previous year

Analyst Take

Lattice Semiconductor stock did very well from 2019 to 2021, advancing more than 1,000%. That momentum was only disrupted by investors’ concerns about inflation, interest rates, the war in Ukraine, and a possible recession. All of those issues are temporary, however.

Lattice Semiconductor Corp was an excellent company before those challenges, and it remains so. It continues to report fabulous financial results and strong guidance. That’s why the near-term and long-term outlooks for LSCC stock are exceptionally bullish.