On Tuesday, Lattice (OTC:LTTC) Semiconductor (NASDAQ:LSCC) experienced a reduction in its price target, now set at $55, down from the previous $67, while its stock rating remains at Hold.
The adjustment follows the company's second-quarter revenue report, which disclosed earnings at the lower end of management's guidance and below market expectations. The revenue of $124.1 million marked a 35% year-over-year decline and a 12% drop from the previous quarter, primarily impacted by persistent cyclical industry challenges.
Management at Lattice Semiconductor indicated that, despite the current inventory normalization extending into the latter half of the year, there have been some emerging signs of improvement. The company's gross margin held steady at 69%, aligning with their forecasts. During these difficult times, Lattice Semiconductor has kept a tight rein on expenditures, focusing on cash flow to navigate the challenging market conditions.
Looking forward to the September quarter, the company has set the midpoint of its revenue guidance at $127 million. This projection indicates a 34% decrease compared to the same period last year and a slight sequential increase of 2-3%. However, this forecast falls short of consensus expectations as the company works through the depletion of channel and end-customer inventory.
Despite the lower revenue and cautious outlook, management's efforts to maintain profitability and expand the product portfolio were acknowledged as positive. Nevertheless, the firm suggested that potential drivers for stock price growth are limited until there is clearer visibility into the trajectory of revenue recovery.
In other recent news, Lattice Semiconductor's gross margin remained steady at 69%, despite the revenue decline. The company's operating expenses for Q3 2024 are expected to stay between $53 million and $55 million.
Recent developments include the launch of new products such as the Lattice MachXO5D-NX and the Lattice Sentry solution stack. These new product introductions are anticipated to contribute to future growth.
Despite missing the June quarter guidance due to weakness in industrial and automotive sectors, Lattice Semiconductor is confident in its long-term growth prospects. The company anticipates a return to growth in the latter half of the year, driven by ongoing inventory normalization and new product introductions.
InvestingPro Insights
In the context of Lattice Semiconductor's recent financial performance and market position, InvestingPro data and tips provide additional layers of analysis for investors. According to real-time data from InvestingPro, Lattice Semiconductor has a market capitalization of $7.56 billion and is currently trading at a high P/E ratio of 35.05, which may indicate that the stock is priced optimistically relative to its earnings. The company's revenue for the last twelve months as of Q1 2024 stands at $693.66 million, reflecting a marginal decline of 0.07%. Despite this, the gross profit margin remains robust at 69.53%, underscoring the company's ability to maintain profitability in a challenging environment.
InvestingPro Tips suggest caution, highlighting that analysts have revised their earnings estimates downwards for the upcoming period, and the company is trading at a high earnings multiple relative to near-term earnings growth. With analysts expecting a sales decline and a drop in net income this year, these factors could be significant for investors considering the stock's future performance. On the positive side, Lattice Semiconductor's cash flows can sufficiently cover interest payments, and its liquid assets exceed short-term obligations, suggesting financial stability.
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