Analyst Blake Friedman of Bank of America Securities reiterated a Hold rating on Lattice Semiconductor (LSCC – Research Report), with a price target of $65.00.
Blake Friedman has given his Hold rating due to a combination of factors impacting Lattice Semiconductor. His analysis suggests caution in the FPGA market, pointing to lower sales estimates that fall short of consensus expectations. Notably, Lattice’s Q1 sales are projected to decline by 8%-9% quarter-over-quarter, which contrasts with the broader market’s flat or positive outlook. Additionally, gross margins are modestly reduced, and even with a modest second-half recovery, Friedman’s CY24 sales and EPS estimates are significantly below Wall Street’s predictions, reflecting a year-over-year decline. The revised price objective is set at $65, factoring in these conservative estimates and applying a long-term average P/E to Lattice’s risk-adjusted forecast.
Friedman’s cautious stance also reflects broader semiconductor market signals that suggest an ongoing cyclical correction through the first half of 2024. He notes industry peers experiencing sales declines and soft business outlooks, which could potentially affect Lattice’s performance. Despite Lattice’s strong performance improvement over recent years, its significant exposure to the automotive and industrial sectors—comprising around 60% of its sales—makes it vulnerable to the same macro risks that peers are facing. Moreover, there are concerns about Lattice’s high channel exposure which may obscure future visibility. Therefore, the Hold rating is maintained, acknowledging the balanced risk-reward profile and the company’s premium profitability that could justify a higher multiple relative to the sector.
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Lattice Semiconductor (LSCC) Company Description:
Lattice Semiconductor Corp. designs, develops and markets programmable logic products and related software. The company includes semiconductor devices, evaluation boards, development hardware, and related intellectual property licensing, services, and sales. It provides smart connectivity solutions powered by its low power FPGA, video ASSP, millimeter wave, and IP products to the consumer, communications, industrial, computing, and automotive markets. The company was founded in 1983 by Samir Palnitkar and is headquartered in Hillsboro, OR.
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