What Happened?

Shares of semiconductor designer Lattice Semiconductor (NASDAQ: LSCC) jumped 15.8% in the pre-market session after the company reported impressive fourth-quarter results, which revealed a big improvement in inventory levels and a stronger-than-expected sales outlook for the next quarter. 

The company's CEO struck an optimistic tone, which is a contrast to the uncertainty of previous quarters, saying "We are starting to see signs of improvement in the broader market environment as evidenced by our stronger backlog and improved book to bill, which bode well for our business moving forward." These signals are fueling optimism for broad-based growth in the first quarter. 

On the other hand, its EPS in the quarter fell short of Wall Street's estimates. Overall, this was a strong quarter amid lower expectations.

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What The Market Is Telling Us

Lattice Semiconductor’s shares are very volatile and have had 23 moves greater than 5% over the last year. But moves this big are rare even for Lattice Semiconductor and indicate this news significantly impacted the market’s perception of the business. 

The biggest move we wrote about over the last year was 7 months ago when the stock dropped 18.1% on the news that the company reported weak second-quarter earnings results. Its revenue and EPS both missed Wall Street's estimates. 

Looking ahead, guidance for next quarter's revenue also missed analysts' expectations. The company called out industry headwinds, adding, "Second quarter 2024 results reflect the impact of cyclic industry headwinds. While the industry continues to go through a period of inventory normalization, we are starting to see signs of improvement. We continue to execute on our ongoing product portfolio expansion and remain well positioned for long-term growth." 

Overall, this was a mediocre quarter for Lattice Semiconductor. Following the results, Bank of America analyst downgraded the stock's rating from Neutral to Underperform, citing "slowing growth prospects and muted visibility."

Lattice Semiconductor is up 6% since the beginning of the year, but at $59.32 per share, it is still trading 29% below its 52-week high of $83.57 from March 2024. Investors who bought $1,000 worth of Lattice Semiconductor’s shares 5 years ago would now be looking at an investment worth $2,988.

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