Mixed-signal semiconductor designs can offer consumer electronics manufacturers significant advantages in performance, size, cost and power consumption. One of the best known designers of such integrated circuits is headquartered in Austin, Texas.
Silicon Laboratories (NASDAQ: SLAB) designs and develops analog-intensive, mixed-signal integrated circuits (ICs) for a broad range of applications. Its products are commonly found in mobile handsets, satellite set top boxes, automotive sensors, radio tuners, industrial controls and optical networking equipment. Silicon Laboratories is a fabless company, employing Taiwan Semiconductor Manufacturing (NYSE: TSM) to produce its ICs. Most sales are made to customers outside the United States. Texas Instruments (NYSE: TXN) is a major competitor.
The firm pleased investors last week when it reported Q3 EPS of 36 cents and revenues of $87.9 million. Analysts had been expecting 30 cents and $83 million. Management also guided Q4 revenues to $93-$97 million, versus consensus of $90 million. Wedbush Morgan, Lehman Brothers and Deutsche Securities subsequently reiterated "buy" recommendations on the issue. The share price popped on the news and then moved into a bullish "flag" consolidation pattern. Stocks frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Altogether, brokers recommend the issue with two "strong buys," eight "buys" and five "holds." Analysts expect a 34% growth rate through the next year. The SLAB Price to Book ratio (3.12), Sales Growth rate (20.48%) and EPS Growth rate (350.00%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 95% of the outstanding shares. The stock is one of those used to calculate the S&P 400 MidCap Index. Over the past 52 weeks, it has traded between $28.84 and $45.15. A stop-loss of $37.50 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.
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