Silicon Labs Analyst Downgrades Stock Citing Demand Slowdown, High Valuation

  • Needham analyst Rajvindra Gill downgraded Silicon Laboratories, Inc SLAB from Buy to Hold.
  • For the past several months, he had been concerned about slowing consumer demand adversely affecting the Home and Life segment (46% of sales). 
  • For Q4, he estimated Home and Life would decline 17% Q/Q after seven quarters of sequential growth
  • As lead times come in, he expected an acceleration in order push-outs leading to outright cancellations. 
  • His CY23 estimates factored a slowdown in home automation products like smoke alarms, security systems, smart lighting, cameras, hubs, and appliances. 
  • He believed there could be added pressure if there is a slowdown in the housing market (residential and commercial) and if the consumer weakness spills over into enterprise spending. 
  • Despite the contraction in valuation multiple, SLAB traded at a premium.
  • Keybanc analyst John Vinh maintained an Overweight and lowered the price target from $180 to $160.
  • Morgan Stanley analyst Craig Hettenbach maintained an Equal-Weight and lowered the price target from $161 to $151.
  • Barclays analyst Blayne Curtis maintained an Underweight and lowered the price target from $95 to $85.
  • Price Action: SLAB shares traded lower by 3.18% at $114.05 on the last check Thursday.
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