Silicon Laboratories (NASDAQ:SLAB) — This information technology company is a leading designer of integrated circuits (ICs) of the analog-intensive mixed signal type. These ICs are used in a broad range of applications, including home automation security, lighting control and smart metering. They also have potential for use in automotive advances, such as “driverless cars,” and for wireless products within networking and data center applications.
Standard & Poor’s forecasts annual gross margins of 59% to 60% for both 2017 and 2018. In late April, S&P increased their 12-month target price to $75 from $67 and raised their 2017 earnings per share estimate by 13 cents to $2.93 and their 2018 EPS estimate to $3.31 from $3.16.
In the first quarter, SLAB stock beat their estimate by 3 cents at 63 cents, and sales rose 10.5%, which was also better than forecast. At under 25X 2017 EPS and under 23X ’18 EPS, it appears that a price objective of $75 is too modest.
Technically, SLAB stock is in a powerful, steady bull market that began in February 2016 at about $40 and is supported by a 50-day moving average and a bullish support line, both at about $72. Volume has been average, and MACD has been consistently positive throughout the advance.
In April, the stock reached a 16-year high at over $77. Following the positive quarterly earnings, the price reversed back to its bull market support line, then at $70. As noted, major support is now at $72, and that is where traders may try to nab it for a potential run-up to a new high.
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