Silicon Labs: A Growth Story That Is Dented, And Maybe Delayed, But Not Derailed

“Buy the dip” is a piece of advice that can make investors a lot of money over time, but it’s also difficult advice to follow. Every once in a while there’s a market, sector, or stock-specific “freak out”, but more often than not, meaningful dips come with scarier changes in the near-term outlook. The Street being what it is, it’s not uncommon for those near-term changes to lead to big swings in long-term outlooks, estimates, and target prices, as many analysts seem to forget that cyclical stocks/industries cycle in both directions.

Since my last update, Silicon Labs (NASDAQ:SLAB) has outperformed the broader semiconductor space by about 15%, as the company has continued to post strong growth from its IoT-focused business. While there is growing evidence of an impending slowdown (echoed by other players in IoT), this hasn’t been outside of my expectations. I do see elevated risk to sentiment and near-term estimates, but I also think Silicon Labs is trading at a pretty attractive valuation relative to how growth semiconductor stocks typically trade.

 

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Silicon Labs: A Growth Story That Is Dented, And Maybe Delayed, But Not Derailed