Lattice Shares Dip 11% on Earnings, Guidance Miss; BofA Downgrades the Stock

PORTLAND – Lattice (OTC:) Semiconductor Corporation (NASDAQ:LSCC) saw its shares fall sharply at the market open Tuesday after the company reported a shortfall in its fiscal second-quarter earnings and revenue, missing Wall Street estimates.

The company’s earnings per share (EPS) for the quarter were $0.23, slightly below the analyst consensus of $0.24. Revenue also fell short of expectations, coming in at $124.1 million against the projected $130.17 million.

The company’s stock price plummeted over 11% after the report’s release. This downturn reflects investor concerns following the company’s announcement of its second-quarter results, which ended on June 29, 2024.

“Overall, the expectations here were too high, but the mid-range story is relatively unchanged,” Jefferies analysts said in a post-earnings note.

“We lower our PT to $65 as the ramp takes longer, but we still expect solid growth in ‘25/’26 alongside the mid-range ramp,” they added.

At the same time, Bank of America downgraded the stock from Neutral to Underperform due to “slowing growth prospects and muted visibility.”

“As expected, Q2 auto/industrial suffered from broad end market weakness and inventory normalization, with weakness largely extending into at least 2H,” BofA analysts noted.

In contrast, analysts at Rosenblatt believe the Q2 marked a bottom for LSCC, anticipating a recovery in the second half of the year. 

“Lattice’s financial execution remained excellent during the down-cycle with remarkably resilient gross margins despite a cyclical downturn during the year’s first half,” Rosenblatt said.

Esam Elashmawi, Interim CEO and Chief Strategy and Marketing Officer, attributed the underperformance to “cyclic industry headwinds” and a period of inventory normalization within the industry. However, he noted early signs of improvement and emphasized the company’s commitment to product portfolio expansion and long-term growth.

Chief Financial Officer Sherri Luther highlighted the company’s stable gross margin, which underscores the resilience of Lattice’s business model. She also mentioned the company’s disciplined spending and focus on cash flow, alongside continued shareholder returns through share repurchases for the fifteenth consecutive quarter.

Looking ahead, Lattice Semiconductor provided guidance for the third quarter of 2024, expecting revenue to be between $117 million and $137 million. This forecast is below the analyst consensus of $142.5 million, which may have further contributed to the negative investor sentiment.

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