Silicon Labs (SLAB): Is There Untapped Value After the Recent Share Price Pullback?

Silicon Laboratories (SLAB) shares have taken a breather lately, dipping around 15% over the past month. Investors are considering the company’s long-term prospects, especially as recent yearly returns remain positive in spite of short-term volatility.

See our latest analysis for Silicon Laboratories.

While Silicon Laboratories' share price has dropped over the past month, a strong 12-month total shareholder return of nearly 15% shows the company's longer-term momentum remains intact, even as recent price action reflects shifting sentiment around tech growth risks.

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The question for investors now is whether Silicon Laboratories is trading below its true value, offering a potential bargain, or if the market has already priced in all of its future growth prospects.

Most Popular Narrative: 22.4% Undervalued

Silicon Laboratories’ last close of $116.69 is well below the narrative’s fair value estimate of $150.44, highlighting significant upside potential according to the prevailing view. The narrative bases this bullish outlook on multiple growth catalysts and ambitious profit turnaround projections, setting the stage for a closer look at why some see room for share price recovery.

Ongoing rollout of new, highly integrated, energy-efficient wireless platforms (Series 2 and Series 3) positions Silicon Labs to capture increased market share and supports higher ASPs, which is likely to drive top-line growth and gross margin improvement.

Read the complete narrative.

Want to know the financial leap that backs this optimistic price? The core narrative hints at a sharp reversal in profit trends and a revenue acceleration beyond what the market expects. Are you intrigued by what kind of future profitability and industry comparisons justify this surprising figure? Only a deep dive into the full narrative reveals the bold projections and the rationale behind this strong upside call.

Result: Fair Value of $150.44 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, intensifying competition in the IoT chip market and the risk of slowing IoT adoption could limit Silicon Labs’ future growth and margins.

Find out about the key risks to this Silicon Laboratories narrative.

Another View: Our DCF Model Challenges the Upside

While analyst consensus points to a substantial upside, our SWS DCF model tells a different story for Silicon Laboratories. According to this cash flow-based approach, the stock appears overvalued at its current price, suggesting far less upside than some expect. Could relying on growth projections alone be too optimistic?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Silicon Laboratories for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 905 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Silicon Laboratories Narrative

If you see things differently or want to dig into the numbers yourself, you can build your own narrative in just a few minutes, your way. Do it your way

A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding Silicon Laboratories.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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