Why Lattice Semiconductor Shares Crashed Hard Today
Shares of Lattice Semiconductor (NASDAQ: LSCC) fell as much as 20.1% on Tuesday morning. The maker of field programmable gate arrays (FPGA) reported robust earnings, but modest guidance for the next quarter left investors disappointed. The stock recovered somewhat over time but was still down by 16.6% as of 2:10 p.m. ET.
Lattice's third quarter by the numbers
Your average analyst had expected earnings of roughly $0.52 per share on sales in the neighborhood of $192.1 million. Lattice edged out these expectations across the board. Earnings rose 10% year over year to $0.53 per share while revenue increased 11% to $192.2 million.
So far, so good. But the story changed when investors considered management's fourth-quarter guidance. Top-line sales for that period were pointed toward approximately $176 million, which would be up from $142 million in the year-ago report but well below the analyst consensus at $196 million.
Management's view of the near future
On theearnings call Lattice's management highlighted soft sales in certain end markets. Most of the upcoming shortfall was attributed to the industrial and automotive sectors, where many infrastructure upgrades are on hold amid the ongoing inflation crisis.
At the same time, management said that the company has a plethora of new product designs and several important contract wins in the third quarter. Therefore, Lattice might be up for some lumpy results in the short term, but things should be fine in the long run.
CEO Jim Anderson said, "We believe that industrial automation, robotics, automotive electronics, that these applications are in multiyear secular-growth trends that will last for many years over the long term, and that Lattice and Lattice Devices are really well positioned to take advantage of those secular growth trends."
Management comments are never 100% reliable indicators of what's next, but Anderson's analysis certainly makes sense. Lattice serves a wide range of potentially powerful growth markets, and I would be shocked to see all of them stuck in quicksand much longer. And don't forget that Lattice is both profitable and debt-free.
This is not my favorite semiconductor stock, especially since mighty Advanced Micro Devices (NASDAQ: AMD) is leaning into the FPGA market after the $49 billion Xilinx buyout, but today's price cut looks overly zealous. If you were looking for an opportunity to buy Lattice Semiconductor stock on a dip, this would be a good time to take action.
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Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices. The Motley Fool has a disclosure policy.
