The inventory correction the semiconductor industry has been grappling with for about two years is almost complete, an analyst said.
The tech earnings new flow continues in the unfolding week as market participants get another chance to reassess the industry outlook after last week’s mixed bag of big tech earnings.
The earnings growth for the information technology sector has been scaled back from 15.6% at the end of the September to 6.4% currently, according to financial data analytics company FactSet’s recent weekly earnings insight report.
A handful of semiconductor companies are on tap to report this week and these include Qualcomm, Inc. ($QCOM), Silicon Laboratories, Inc. ($SLAB), NXP Semiconductors N.V. ($NXPI), Lattice Semiconductor Corp. ($LSCC) and Navitas Semiconductor Corp. ($NVTS).
Silicon Labs: Fabless semiconductor company Silicon Labs, is due to report its third-quarter results after the market closes on Monday. The company’s third quarter is expected to turn around from a profit of $0.62 in 2023 to a loss of $0.20 in 2024. The top line may have decreased year-over-year (YoY) from $200.14 million to $165.5 million.
Morgan Stanley analyst Joseph Moore expects continued sequential growth in the third quarter, albeit at a slow pace due to the mixed IoT environment.
NXP: Netherlands-based NXP will announce its quarterly results after the market closes on Monday. The company, which provides chips to the automotive, industrial & IoT, mobile, and communications infrastructure markets, is widely expected to report YoY declines in EPS from $3.62 to $3.43 and revenue from $3.41 billion to $3.25 billion.
In mid-October, Stifel reduced the price target for NXP shares from $275 to $260 and maintained a Hold rating, according to the Fly. Even as the semiconductor industry is recovering from a two-year inventory correction, NXP’s key end markets, namely automotive and industrial, have lagged, he said.
Navitas: Torrance, California-based Navitas, which is a pure-play power-semiconductor company, is scheduled to report after the market closes on Monday. Analysts, on average, expect the company to report a wider loss of $0.06 for the third quarter compared to last year’s $0.05 last year. Revenue is estimated at $21.93 million, up 3.74% YoY.
A few in the retail crowd are negative regarding the chipmaker’s near term but are positive about the long-term.
Lattice Semi: Oregon-based Lattice Semi is also due to report after the market closes on Monday. The chipmaker is expected to report EPS of $0.24 and revenue of $127.05 million for the September quarter, compared to the year-ago’s $0.52 and $192 million, respectively.
Qualcomm: San Diego, California-based Qualcomm is scheduled to report its fiscal year 2024 fourth-quarter results after the market closes on Wednesday. Analysts, on average, estimate earnings per share (EPS) of $2.56 versus the $1.91 earned a year ago. The consensus calls for an increase in revenue from $8.51 billion to $9.9 billion.
Investors may also look for clarity on Qualcomm’s rumored interest in struggling Intel Corp. ($INTC).
Following Qualcomm’s Snapdragon Summit key note, Morgan Stanley’s Moore said he sees potential with EdgeAI but is wary of the loss of Apple, Inc.’s ($AAPL) baseband business. “We struggle to justify a premium multiple on a business with high Samsung exposure,” he said.
A Stocktwits user said investors are committed to the stock on a long-term basis.
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