Healthy IoT Growth And Better Margins Support Silicon Labs

I’ve sort of thrown in the towel on valuation where Silicon Labs (SLAB) is concerned, accepting that the market is wiling to pay premiums beyond what I think is fair or reasonable to hold a position in one of the closest things to an IoT pure-play in the chip sector. To that end, my prediction from my last update that Silicon Labs could be a relatively attractive name in a growth-starved chip sector has helped up reasonably well, with SLAB continuing to outperform the chip sector as a whole.

Valuation doesn’t seem to be a consideration here; or at the very least, the Street is choosing to focus more on the buyout premiums paid for wireless assets like Cypress (CY), Quantenna (QTNA), and Marvell’s (MRVL) portfolio (3x-6x sales) than historical norms. Provided that Silicon Labs keeps growing, the party may not come to an end soon, but I have a hard time paying up to this extent.

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Healthy IoT Growth And Better Margins Support Silicon Labs