Silicon Labs Stock is Falling to a Better Place

Fabless integrated circuit (IC) semiconductor company Silicon Labs NASDAQ: SLAB stock is attempting to rebound after losing more than (-30%) on the year with the benchmark Nasdaq index. The IoT leader in secure and intelligent wireless technology saw impressive growth in its fiscal Q1 2022 report prompting a guidance raise for Q2 2022. The IoT market remains strong as illustrated by the double digit revenue growth on results that beat estimates handily while raising EPS guidance. Industrial and commercial sales grew 61% helping drive its seventh straight quarter of record revenues. The Company has been successful navigating the tumultuous supply chains amid the global chip shortage. Growth was strong across all wireless protocols and end markets from electronic shelf labels, industrial automation, and asset monitoring to Home & Life with smart appliances and portable medical devices. IoT continues to gain momentum and adoption as the need for convenience and efficiency are constant tailwinds. Prudent investors seeking exposure in the largest pure play IoT wireless company can watch for opportunistic pullbacks in shares of Silicon Labs.

Q1 Fiscal Year 2022 Earnings Release

On April 27, 2022, Silicon Labs released its fiscal first-quarter 2022 results for the quarter ending March 2022. The Company reported an earnings-per-share (EPS) profit of $1.05 excluding non-recurring items versus consensus analyst estimates for a profit of $0.64, a $0.41 beat. Revenues grew 48.2% year-over-year (YoY) to $223.8 million missing analyst estimates for $226.22 million. Non-GAAP gross margins rose 67%. The Company announced and shipped partial samples of the xG24 family of system-on-a-chip (SOCs) to strong customer response. The Company bought back 1.76 million shares or $250 million. The Board approved up to an additional $350 million through the end of 2022. Silicon Labs CEO Matt Johnson commented, “We are off to an outstanding start in our first full year as the largest pure-play IoT wireless company. We delivered record revenue in the quarter and great operating results. Demand for our solutions remains strong, and our design win momentum is accelerating across our wireless portfolio and in both our Industrial & Commercial and Home & Life end markets." 

Upside Guidance

The Company raised Q2 2022 EPS guidance to $0.85 to $0.95 versus $0.59 consensus analyst estimates.

Conference Call Takeaways

CEO Johnson continued to emphatically emphasize and set the narrative that Silicon Labs is bar none the largest wireless IoT technology company in the world. He underscored the powerful demand for its products as design and momentum is accelerating faster than its 79% revenue growth, “Our opportunity pipeline also continues to grow, now well over $14 billion as we gain visibility and identify new opportunities within our large and growing market.” He elaborated on the xG24 family of SOCs, “We’re also incredibly proud of the xG24 performance on the important MLCommons Machine Learning and Inference Performance benchmark. With integrated AI ML hardware acceleration the xG24 wireless SoCs provide up to four times faster processing with up to six times lower power consumption for machine learning workloads. This means even ultra-low power wireless of IoT devices can now be enhanced with machine learning capabilities.” It’s common software and hardware solutions are purpose-built for IoT applications enabling efficient scaling for accelerated wireless adoption. The Company is positioned to lead and scale in IoT and expects to achieve billions of units per year in the decade.

SLAB Opportunistic Pullback Levels

Using the rifle charts on the weekly and daily time frames provides a precision view of the price action playing field for SLAB stock. The weekly rifle downtrend bottomed near the $125.49 Fibonacci (fib) level. The weekly 5-period moving average (MA) is sloping up at $135.48 towards the weekly 15-period MA at $144.22. The weekly 50-period MA resistance sits at $159.06. The weekly 200-period MA support sits at $118.29. The weekly stochastic is attempting to cross up again at a higher crossover level setting up a divergence bottom on the weekly market structure low (MSL) buy triggered above $143.62. The daily rifle chart formed a pup breakout with rising 5-period MA support at $138.38 with rising 15-period MA support at $137.14. Shares blasted through the daily 50-period MA at $141.06. The daily upper Bollinger Bands (BBs) sit at $147.98 as the daily stochastic crosses back up again through the 70-band. The daily 200-period MA resistance sits at $162.45. Prudent investors can watch for opportunistic pullback levels at $139.37 fib, $134.18 fib, $132.82 fib, $128.93 fib, $125.47 fib, $119.32 fib, $113.98 fib, and the $108.37 fib level. Upside trajectories range from the $156.04 fib level up towards the $177.73 fib level.