Tuesday, Baird increased its price target on shares of Lattice (OTC:LTTC) Semiconductor (NASDAQ:LSCC) to $70.00, up from the previous target of $60.00, while maintaining an Outperform rating on the stock.
The firm noted that despite a new downward adjustment in the company's revenue outlook, which suggests a more significant recovery will be needed in 2025 to justify the current valuation, the pricing stability and gross margin resilience provide a positive backdrop.
The analyst pointed out that Lattice Semiconductor's gross margin is expected to remain steady with minimal downside at present levels. The projection is that the gross margin contribution from Avant, a recent acquisition by Lattice, will start to become evident in 2025. This anticipated contribution is among the factors contributing to the maintained Outperform rating on the stock.
The firm highlighted risks associated with the pace of recovery in 2025 and future pricing as potential challenges for Lattice Semiconductor. Despite these risks, the analyst's outlook remains positive, as reflected in the Outperform rating.
Baird's updated assessment comes amid a broader context where the company has had to revise its revenue outlook downwards twice. The firm's "Bearish Fresh Pick" designation indicates caution regarding the potential impact of these outlook revisions on the stock's valuation. The emphasis is on the need for a robust recovery in the coming years to align with the current market expectations for Lattice Semiconductor.
InvestingPro Insights
Baird's new stock price target and optimistic stance on Lattice Semiconductor (NASDAQ:LSCC) align with some of the real-time data and InvestingPro Tips that provide a deeper understanding of the company's financial health and market performance.
Notably, Lattice Semiconductor has experienced a significant return over the last week, with a 13.08% increase in price total return. This momentum is part of a broader pattern of strong returns, including a 26.29% three-month price total return, showcasing the stock's recent positive trajectory.
On the valuation front, Lattice Semiconductor is trading at a high P/E ratio relative to near-term earnings growth, with an adjusted P/E ratio for the last twelve months as of Q1 2024 standing at 47.83.
This high valuation is also reflected in the Price / Book ratio of 15.49, which may be a point of consideration for investors looking at the company's book value compared to the market price. Despite a slight revenue decline of 0.07% over the last twelve months, the company's gross profit margin remains robust at 69.53%, indicating efficient cost management.
Investors interested in a comprehensive analysis can find additional InvestingPro Tips, including insights on the company's long-term returns and debt management, on the InvestingPro platform. For those looking to delve deeper, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are 18 more InvestingPro Tips available for Lattice Semiconductor, offering a full spectrum of analysis for informed decision-making.
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