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On Wednesday, Benchmark analyst Cody Acree upgraded Silicon Labs stock, traded on (NASDAQ:SLAB), from Hold to Buy, setting a new price target of $160.00. Acree’s optimism is based on the company’s performance through recent industry challenges and the expectation of a positive shift in fundamentals. The analyst foresees a favorable industry up-cycle that could extend through the fiscal year 2026. According to InvestingPro data, four analysts have recently revised their earnings expectations upward, while the stock has shown strong momentum with a 35% gain over the past six months.
In his analysis, Acree pointed out that despite Silicon Labs’ forward Price-to-Earnings (P/E) valuation being high, the company’s fundamentals are expected to improve. The upgrade comes with a 12-month price target of $166, which is based on 53.5 times the firm’s new fiscal year 2026 Earnings Per Share (EPS) estimate of $2.55. This target implies a Price/Earnings to Growth (PEG) ratio of just 0.23 times the anticipated EPS growth rate of 276% for the year. InvestingPro’s Fair Value analysis suggests the stock is currently overvalued, though the company maintains strong financial health with a current ratio of 6.15, indicating excellent liquidity.
The analyst also noted that Silicon Labs currently trades at a significant premium when considering the absolute trading multiple. However, when the company’s estimated earnings growth rate for fiscal year 2026 is taken into account, the relative PEG stands at a more attractive 0.19 times. Acree expects this ratio to expand modestly to 0.23 times to align with the $160 price target, driven by potential upward revisions to future estimates. With a market capitalization of $4.43 billion and a healthy gross profit margin of 53.42%, the company maintains strong fundamentals despite current market challenges. Discover more detailed insights and 8 additional key ProTips for SLAB with an InvestingPro subscription.
Silicon Labs’ management of the industry correction and the anticipated emergence from macroeconomic pressures were highlighted as key factors in the company’s favor. Benchmark’s projection of a sustained industry up-cycle through fiscal year 2026 suggests a longer-term positive outlook for Silicon Labs.
The price target increase to $160 reflects confidence in Silicon Labs’ growth trajectory and the potential for estimate revisions that could further enhance the stock’s appeal to investors. This new target represents a significant milestone for the company as it navigates the evolving semiconductor industry landscape.
In other recent news, Silicon Labs reported a revenue of $166 million in the third fiscal quarter of 2024, marking a 14% increase from the previous quarter. Despite this growth, the figure represents an 18% decline year-over-year, attributed to ongoing inventory issues. The company, however, anticipates a demand recovery extending into 2025. Needham, in its recent analysis, has raised its price target for Silicon Labs to $150, maintaining a Buy rating. The firm notes Silicon Labs’ growth trajectory, highlighting strong momentum in Continuous Glucose Monitors (CGMs) and Electronic Shelf Labels (ESLs).
On the other hand, Stifel continues to express confidence in Silicon Labs, reiterating a Buy rating and a $135.00 price target. This follows the firm’s participation in Silicon Labs’ Virtual Works With 2024 IoT developer conference, which showcased the company’s advanced Series 3 connectivity platform. The recent developments underline Silicon Labs’ strategic positioning within the industry and its potential for growth.
These updates reflect the latest happenings around Silicon Labs, providing investors with a snapshot of the company’s financial performance and market expectations. As always, the future performance of Silicon Labs will be shaped by various factors, including market conditions and the company’s strategic initiatives.
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