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 Q4 EPS of 46 cents and revenues of $100 million. Analysts had been expecting 38 cents and $95.6 million. Management also guided Q1 revenues to $93-$97 million, versus consensus of $90 million. Lehman Brothers subsequently reiterated its "overweight" rating on the issue. Kaufman Brothers and Wedbush Morgan reiterated "buys". The brokers declared price targets in the $37-$40 range.
SLAB shares
popped on the news and then began to define a bullish "flag" consolidation pattern. Prices 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 three "strong buys", seven "buys" and three "holds". Analysts expect a 20% growth rate, through the next year. The SLAB Price to Book ratio (2.37), Sales Growth rate (34.05%) and EPS Growth rate (411.11%) 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 $25.39 and $45.15. A stop-loss of $27.15 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.
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