On Friday, Stifel maintained a positive outlook on shares of Silicon Labs (NASDAQ:SLAB), reiterating a Buy rating and a $135.00 price target. The endorsement follows the firm's participation in Silicon Labs' Virtual Works With 2024 IoT developer conference.
The event featured key industry figures, including Silicon Labs' President and CEO Matt Johnson, CTO Daniel Cooley, along with other notable speakers such as NVIDIA’s David Niewolny and SLAB’s John Dixon.
The conference highlighted the significant role of artificial intelligence (AI) in driving the adoption of IoT networks and devices. AI's demand for high-quality, actionable data, especially for refining training models with real-world scenarios, was emphasized as a key factor in the accelerated growth of IoT solutions.
Silicon Labs showcased its advanced Series 3 connectivity platform during the event. This next-generation technology is an evolution of the current Series 2 platform, offering substantial improvements in processing capabilities to meet the growing demands at the edge of networked technology. The first silicon of the Series 3 platform has been received and is now in the sampling phase, marking an important step in its development.
The firm's reiteration of the Buy rating and the 12-month price target of $135 reflects a valuation pegged at 5.0 times the projected CY25E EV/Sales. This valuation underscores Stifel's confidence in Silicon Labs' trajectory and potential in the IoT space, supported by the company's technological advancements and strategic positioning within the industry.
In other recent news, Silicon Labs has reported its fiscal third-quarter 2024 results, with a revenue of $166 million. This figure indicates a 14% increase from the previous quarter, but an 18% decline year-over-year, largely due to ongoing excess inventory issues. In spite of this, the company has noted a gradual recovery in demand, with positive customer sentiment potentially extending into 2025.
Industrial and commercial segments of the company generated $96 million, marking a 20% decrease YoY, while the Home & Life segments brought in $70 million, a 16% YoY decrease, but up 22% sequentially. The company's GAAP gross margin was reported at 54.3% by CFO Dean Butler, with a non-GAAP gross margin of 54.5%.
Looking ahead, Silicon Labs projects its Q4 revenue to be between $161 million and $171 million, with an expected GAAP loss per share between $0.75 and $1.05. Despite the challenges, the company anticipates strong growth in 2025, driven by design wins and technological innovation. This news comes as part of recent developments in the company's financial performance.
InvestingPro Insights
To complement Stifel's positive outlook on Silicon Labs (NASDAQ:SLAB), recent data from InvestingPro offers additional context for investors. Despite the company's strong position in the IoT market, InvestingPro data reveals that Silicon Labs' revenue declined by 47% over the last twelve months as of Q3 2024, with quarterly revenue also showing an 18.34% decrease. This aligns with an InvestingPro Tip indicating that analysts anticipate a sales decline in the current year.
On the financial health front, an InvestingPro Tip highlights that Silicon Labs holds more cash than debt on its balance sheet, which could provide flexibility as the company navigates market challenges and invests in new technologies like the Series 3 platform. Additionally, the company's liquid assets exceed short-term obligations, suggesting a solid near-term financial position.
It's worth noting that Silicon Labs is currently trading at a Price to Book ratio of 3.1, which investors may want to consider in light of the company's growth prospects in the AI-driven IoT market. For those seeking a more comprehensive analysis, InvestingPro offers 7 additional tips that could provide deeper insights into Silicon Labs' financial outlook and market position.
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