Lattice Semiconductor Stock: Undervalued 5G Stock Has 65% Upside

Lattice Semiconductor Corp Provides Strong Guidance

Lattice Semiconductor Corp (NASDAQ:LSCC) was one of the most overlooked, compelling 5G stocks before the stock market sell-off began at the start of this year. Even though LSCC stock has fallen by 25.5% since the beginning of 2022, it continues to be one of the most interesting 5G stocks out there.

From the edge to the cloud, Lattice Semiconductor Corp solves some of the biggest technological challenges around the world. The company is the leading provider of programmable smart-connectivity technology. Lattice Semiconductor 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 automotive (infotainment, advanced driver assistance), communications (5G wireless, switches/routers), computing (servers, client), consumer and broadcasting (smartphones, wearables, smart homes), and industrial (Internet of Things, factory automation). (Source: “Corporate Overview: May 2022,” Lattice Semiconductor Corp, last accessed July 26, 2022.)

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

Advertisement

Q1 Revenue Up 30%; Net Income Up 92%; Outlook Strong

The economy might be taking a hit at the moment, but the demand for 5G products and services remains hot, with the rollout of 5G systems really just kicking off.

In May, Lattice Semiconductor announced that its first-quarter revenue increased by 30% year-over-year and six percent sequentially to $150.5 million. That represents the company’s fifth consecutive quarter of double-digit year-over-year revenue growth. (Source: “Lattice Semiconductor Reports First Quarter 2022 Results,” Lattice Semiconductor Corp, May 3, 2022.)

The company’s gross margin expanded from 61.0% in the first quarter of 2021 to 66.9% in the first quarter of 2022.

Lattice Semiconductor Corp’s first-quarter 2022 net income soared by 92% year-over-year to $36.1 million, or $0.26 per share. Its adjusted net income climbed by 72% to $52.6 million, or $0.37 per share.

The company also achieved a record operating profit of 25.1% and executed its sixth consecutive quarter of share buybacks.

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

  • Revenue between $153.0 and $163.0 million
  • Adjusted gross margin of 68% (plus or minus one percent)
  • Adjusted total operating expenses between $48.0 and $50.0 million

LSCC Stock’s Recent Performance

Lattice Semiconductor stock has been on a tear since bouncing off a support level at the beginning of July. As of this writing, LSCC stock is:

  • Up by 26% over the last month
  • Up by 14% over the last three months
  • Down by 25% year-to-date
  • Up by 11% year-over-year

Chart courtesy of StockCharts.com

Lattice Semiconductor stock’s recent gains have been impressive, and its outlook is robust. Analysts are calling for shares of Lattice Semiconductor Corp to rally between 24% and 66% over the next 12 months.

Analyst Take

What’s not to like about Lattice Semiconductor stock?

Despite the tough macroeconomic environment, Lattice Semiconductor Corp continues to report outstanding financial results, including significant earnings growth and the company’s fifth consecutive quarter of double-digit year-over-year revenue growth.

Meanwhile, the company’s strong guidance is why Wall Street remains bullish on this overlooked 5G stock.