2024-02-11 10:36:41 ET
Summary
- SLAB's Q4'23 performance was weak, with a significant decline in revenue and gross margin.
- The company faced challenges with weak end demand and a large inventory build, but took aggressive actions to address the situation.
- There are two narratives for SLAB: a near-term bear case with continued revenue decline, and a mid-to-long-term bull case with potential for recovery.
Investment action
I recommended a sell rating for Silicon Laboratories ( SLAB ) when I wrote about it the last time, as I was very worried about the fundamentals of the business deteriorating at a worse pace than I expected. As such, I thought it was best to sell the stock in case the situation turned worse. Indeed, Q4'23 performance was very weak, and my mistake was underestimating the market willingness to look forward to the next recovery (and not about things getting worse from here). However, based on my current outlook and analysis of SLAB, I have upgraded to a neutral rating....
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Silicon Laboratories: Upgrade To Neutral As Near-Term Bear Case Is In Focus