Will Lattice Semiconductor Continue Facing Soft Demand? 4 Analysts Examine Q4 Outlook

Shares of Lattice Semiconductor Corp LSCC recovered slightly in early trading on Tuesday, after the company reported mixed results for the fourth quarter.

The results came amid an exciting earnings season. Here are some key analyst takeaways from the release.

• KeyBanc Capital Markets analyst John Vinh maintained an Overweight rating, while lifting the price target from $80 to $85.
• Stifel analyst Ruben Roy reiterated a Hold rating, while reducing the price target from $70 to $67.
• Needham analyst Quinn Bolton reaffirmed a Buy rating and price target of $75.
• Baird analyst Tristan Gerra maintained an Outperform rating and price target of $60.

Check out other analyst stock ratings.

KeyBanc: Lattice Semiconductor’s fourth-quarter results missed expectations and lowered its first-quarter guidance, reflecting “weakening demand in Comms Infra, which is broadening out into Industrials and Automotive in 1Q,” Vinh said in a note.

“Additionally, the correction is expected to persist into 2Q, with revs expected to be flat q/q, while a 2H24 recovery is expected as end-customer inventories normalize and new products in Nexus and Avant ramp more meaningfully,” he added.

Stifel: Lattice Semiconductor reported its fourth-quarter revenues of $170.6 million, short of the consensus expectations, while non-GAAP gross margins contracted slightly on a sequential basis to 70.4%, Roy said. “The decline in the quarter can be attributed to unfavorable product mix and lower inventory absorption,” he added.

“As LSCC management has noted for several quarters, despite recent customer momentum with new and core products, the company is not immune from macro headwinds,” the analyst further wrote.

Needham: Lattice Semiconductor reported “mixed” results “as inventory digestion in the Communication and Industrial end markets hit the top line,” Bolton said. The first-quarter guidance was around $34 million below estimates “as Industrial weakness accelerates,” he added.

“2Q24 revenue should be flattish Q/Q, below typical seasonality, and 2H24 revenue should be up H/H as end customer inventory completes the digestion phase and new Nexus and Avant product ramps contribute,” the analyst further stated.

Baird: “As the inventory correction in Industrial becomes more geographically broadbased (starting China, extending to Europe, U.S. now weakening), we question whether Industrial is hitting a trough this quarter,” Gerra wrote in a note.

“Absent a V-shaped revenue recovery, with a gross margin outlook likely below prior peak level for the medium term, sustained opex spending in preparation for the next node, and a higher tax rate, multiple is unlikely to expand from here,” he added.

AFRM Price Action: Shares of Lattice Semiconductor had risen by 0.75% to $71.53 at the time of publication on Tuesday.

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