One Reason Lattice Semiconductor (LSCC) Stock is Gaining Today

Lattice Semiconductor (LSCC) stock is up as the semiconductor sector gets a boost from the announcement that ON Semiconductor (ON) has acquired Fairchild Semiconductor (FCS) for $2.4 billion.
By Amanda Schiavo ,

NEW YORK (TheStreet) -- Shares of Lattice Semiconductor (LSCC) - Get Report are rising by 6.54% to $5.71 on Wednesday morning, as the semiconductor sector gets a boost from the announcement that ON Semiconductor (ON) has acquired Fairchild Semiconductor (FCS) for $2.4 billion.

Lattice Semiconductor is Hillsboro, OR-based designer, developer and marketer of programmable logic products and related software.

The deal between ON Semiconductor and Fairchild is the latest in a string of more than $90 billion in transactions in the global chip industry in the past year, Bloomberg reports.

ON Semiconductor will pay $20 per share in cash for Fairchild, a 12% premium to the stock's closing price yesterday.

"The industry has matured a lot," Steve Smigie, an analyst at Raymond James & Associates, told Bloomberg.

"There's not as much growth as there used to be, so the companies are looking for new ways to generate value for shareholders. In this environment, with very low interest rates, it's easy to get cheap financing, so that makes the potential for M&A much higher," Smigie added.

Separately, TheStreet Ratings team rates LATTICE SEMICONDUCTOR CORP as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

We rate LATTICE SEMICONDUCTOR CORP (LSCC) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 364.3% when compared to the same quarter one year ago, falling from $9.41 million to -$24.86 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, LATTICE SEMICONDUCTOR CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The share price of LATTICE SEMICONDUCTOR CORP has not done very well: it is down 24.21% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • LATTICE SEMICONDUCTOR CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, LATTICE SEMICONDUCTOR CORP increased its bottom line by earning $0.41 versus $0.20 in the prior year. For the next year, the market is expecting a contraction of 109.8% in earnings (-$0.04 versus $0.41).
  • 47.05% is the gross profit margin for LATTICE SEMICONDUCTOR CORP which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, LSCC's net profit margin of -22.66% significantly underperformed when compared to the industry average.
  • You can view the full analysis from the report here: LSCC

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

Loading ...