Execution, Opportunity, And Scarcity Value All Propelling Lattice Semiconductor

Lattice Semiconductor (LSCC) remains a case-in-point as to why I recommend investors not worry about valuation quite as much when they already own a growth company that is executing well – when growth investors lock onto a name, they can propel the valuation to and beyond levels that seem well out of proportion to the underlying operational story.

That’s not meant as sour grapes with respect to Lattice, though of course I wish I’d bought shares at literally any price over the last few years. I see significant growth potential in the company’s low-power FPGA target market, and that opportunity is matched by what I believe has been good execution from this management team. The issue for me is that the shares already trade at over 50x 2021 EPS and 12x 2021 revenue. Even allowing for beat-and-raise opportunity, I just don’t know how to reconcile that valuation, particularly with the shares already trading at more than 100% of management’s prior estimate of its 2022 served addressable market.

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Execution, Opportunity, And Scarcity Value All Propelling Lattice Semiconductor