LSCC Stock Down 35% in 2022 but Could Have 85% Upside

If stocks make their biggest upward moves during bear markets, Lattice Semiconductor Corp (NASDAQ:LSCC) is going to have a great run in 2023. That's assuming the stock market bottoms by then.

Lattice Semiconductor is an excellent 5G company that has seen its share price take a big hit on stubbornly high inflation, rising interest rates, fears of a recession, and supply chain woes.

None of those factors have really been undermining the company’s business growth, though. Lattice Semiconductor Corp continues to report record revenue growth, high earnings growth, and significant cash flow. It also continues to launch new products, add new clients, and provide strong guidance.

For all the wonderful things going on at the company, Lattice Semiconductor stock is down by 35% year-to-date and year-over-year. Despite all the excitement on Wall Street about the Dow Jones Industrial Average having its best month in 46 years, it’s really just a bear market rally, which means stocks have further to fall. So, chances are, LSCC stockholders will face additional pain over the coming months.

The long-term outlook for Lattice Semiconductor stock, however, is bullish. Analysts have provided a 12-month average share-price estimate of $68.67 and high estimate of $95.00. This points to potential gains in the range of 30% to 85%.

Chart courtesy of StockCharts.com

Lattice Semiconductor Corp Overview

Lattice Semiconductor is the leading provider of programmable smart-connectivity technology. It solves problems related to various technologies, ranging from the Edge to the Cloud. The company helps its 8,000 customers implement their own designs, lower their development costs, and improve their overall time to market.

Lattice Semiconductor Corp operates in a variety of growing end markets, including the following:

• Automotive (infotainment, advanced driver assistance)
• Communications (5G wireless, switches/routers)
• Computing (servers, client)
• Consumer and broadcasting (smartphones, wearables, smart homes)
• Industrial (Internet of Things, factory automation)

(Source: “Corporate Overview: October 2022,” Lattice Semiconductor Corp, last accessed November 14, 2022.)

Five of Lattice Semiconductor Corp’s blue-chip customers are Alphabet Inc (NASDAQ:GOOG), Amazon.com, Inc. (NASDAQ:AMZN), Cisco Systems Inc (NASDAQ:CSCO), Ford Motor Company (NYSE:F), and Raytheon Technologies Corp (NYSE:RTX).

Q3 Revenue Up 31% & Net Income Up 73% Year-Over-Year

For the fiscal third quarter ended October 1, Lattice Semiconductor reported revenue growth of 31% year-over-year to a record $172.5 million. The company's net income improved by 73% to $48.8 million, or $0.33 per share. (Source: “Lattice Semiconductor Reports Third Quarter 2022 Results,” Lattice Semiconductor Corp, October 31, 2022.)

Jim Anderson, the company's president and CEO, said, "Topline growth was driven by our strategic segments of industrial and automotive, as well as communications and computing." (Source: Ibid.)

He added. "We are pleased with the continued growth in our existing products and very excited about the expansion of our product portfolio into new greenfield opportunities with the December launch of Lattice Avant."

Sherri Luther, Lattice Semiconductor Corp's CFO, commented, "We drove strong cash flow generation and executed our eighth consecutive quarter of share buybacks."

During the third quarter, Lattice Semiconductor's board authorized the company to repurchase up to $150.0 million worth of the outstanding shares of LSCC stock through the end of 2023.

For the fourth quarter, Lattice Semiconductor Corp's management expects to report revenue in the range of $170.0 to $180.0 million. At the midpoint, that represents year-over-year revenue growth of 23.5%.

Analyst Take

Despite macroeconomic headwinds, Lattice Semiconductor Corp continues to do everything right. This includes record revenues and high earnings growth.

Thanks to high cash flow generation, the company was able to execute its eighth consecutive quarter of share buybacks. With the company's fourth-quarter revenue projected to advance by 23.5%, the outlook for Lattice Semiconductor stock is robust.