Lattice To Gain From Solid Exposure In Long-Term Growth Markets Amid Lower Macro Volatilities: Analyst

Benchmark analyst David Williams reiterated a Buy rating on Lattice Semiconductor Corporation LSCC, raising the price target to $105 from $95.

The company recently reported second-quarter results, where quarterly revenue grew 18% Y/Y.

2Q results were better than expected, with guidance in-line with expectations. LSCC 2Q results demonstrate the strength of the portfolio and leverage to high growth secular trends protecting from the macro volatility, the analyst notes.

The analyst applauds the company's resiliency of gross margin with 13 consecutive quarters of improvement and further expansion opportunities as the Nexus family ramps ahead of AVANTs contribution next year.

Williams continues to view LSCC as a compelling story with favorable exposure to long-term growth markets limiting macro volatility impacts. With few competing solutions and tailwinds strengthening across the business, LSCC is well positioned with a differentiated portfolio of solutions and a value-added, ASP accretive software stack, the analyst adds. 

Although A.I. provides a nice demand tailwind for the server business, the analyst believes the considerable step up in dollar content on next-generation general application servers (Saphire Rapids) will become a more meaningful growth driver in the near term. 

Williams expects revenue to begin inflecting in 2024 with the ramp of Avant E earlier this year, followed by two additional product families later this year.

Based on the above, the analyst raised the FY23 EPS estimate to $2.08 from $2.05. FY23 revenue estimate is increased to $761.23 million from $759.65 million.

For FY24, Williams sees EPS of $2.41, raising the revenue estimates to $860.56 million from $842.83 million.

Price Action:  LSCC shares are trading higher by 2.57% to $93.28 on the last check Tuesday.

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