FBR Capital Remains Bullish on Lattice Semiconductor (LSCC) Following Worse-Than-Expected 4Q Results
FBR Capital reiterated an Outperform rating on Lattice Semiconductor (NASDAQ: LSCC), and raised the price target to $6.50 (from $6.00), following the company's 4Q earnings report. Lattice’s 4Q revenue was $101.3M, worse than the Street’s estimate of $110M. For 1Q16, management guided revenue to be $95M–$101M, worse than Street expectations of ~$111M. Management expects 1Q16 to represent a low point in 2016 due to broad-based macro conditions.
Analyst Christopher Rolland commented, "On Wednesday, February 17, Lattice reported significantly worse-than-expected 4Q15 results and poor 1Q16 guidance; however, unlike prior years, the company offered 2016 revenue guidance—and it was significantly higher than a normalized run-rate off 1Q16 guidance would suggest. We think this can only mean one thing: In 2H16, Lattice is finally supplying FPGA parts to the last major handset OEM it has been hunting for years. We have a few clues. First, based on typical seasonality, we identified a $60M hole that likely can only be filled by a mega-volume win. Second, LSCC believes that consumer products will be the main contributor to the 2H16 inflection. Finally, management stated that it will now need to dual-source parts at the request of a customer, clearly one with influence, as this is a particularly onerous burden for a company trying to conserve cash. While this would be a really important win for Lattice, upside may be wholly mitigated if its core business does not stabilize from here (a concern). Given this potential win, we raise our price target from $6 to $6.50 and maintain our Outperform rating."
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Shares of Lattice Semiconductor closed at $4.76 yesterday.