Lattice Semiconductor Corporation

LSCC Details

Lattice Semiconductor Corporation (NASDAQ: LSCC) is the low-power programmable leader. The company and its subsidiaries are involved in developing technologies and monetizing by way of differentiated programmable logic semiconductor products, system solutions, design services, and licenses.

Image source: Copyright © 2022 Kalkine®, Data Source: REFINITIV, Analysis: Kalkine Group

Financial Results for the Quarter Q1 FY22

• The Group reported revenues of $150.5 mn in Q1 FY22, reflecting an increase of 30% on the prior year period.
• There has been an improvement in gross margin to 66.9% during the quarter, compared to 61.0% in Q1 FY21.
• Net income grew to $36.08 mn in Q1 FY22, from $18.81 mn reported in Q1 FY21 driven by expanding product portfolio.

The Group will hold its conference call on Q2 FY22 results on 01 August 2022.

Key Updates

On 19 July 2022, the Group has updated about collaboration with LG to bring edge AI solutions to 2022 LG gram premium laptop line-up.

Outlook

The company anticipates revenue in the range of $153-$163 mn for Q2FY22. The gross margin is projected to be 68% plus or minus 1% on a non-GAAP basis for Q2FY22. Further, the total operating expenses for Q2FY22 are expected to be within $48-$50 mn on a non-GAAP basis.

Key Risks

The company is exposed to the impact of the COVID-19 pandemic on its business. Its global business exposes the company to several economic, legal, regulatory, political, and business risks. The company depends on a concentrated number of subcontractors to supply and fabricate silicon wafers and perform assembly and test operations for its semiconductor products. It is also prone to shortages in or increased costs of wafers and materials, which could unfavorably impact its gross margins and revenues.

Valuation Methodology: EV/Sales Based Relative Valuation (Illustrative)

Stock Recommendation

Over the last one month, the stock has given a return of ~22.05%. The stock is trading lower than the average price of 52-week low-high range for the stock at $43.41-$85.45, respectively.

The stock has been valued using an EV/Sales multiple-based illustrative relative valuation, and the target price so arrived reflects a fall of high single-digit (in % terms). A slight premium has been applied to EV/Sales Multiple (NTM) (Peer Average), considering the decent guidance.

Considering the recent rally in the stock price and risks associated, we are of the view that it is prudent to book profits at the current levels. Hence, a “Sell” recommendation has been given on the stock at the current price of $58.95 per share, as of 21 July 2022, at 9.56 am New York Time, USA (GMT-4).

Technical Overview:

Daily Price Chart

(Source: Refinitiv, Analysis done by Kalkine Group)

Lattice Semiconductor Corporation (LSCC) is a part of Kalkine’s Global Big Money Product

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is July 21, 2022. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

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