Silicon Labs (SLAB) Valuation Check After Analyst Upgrades and Short-Term Share Price Rebound

Silicon Laboratories (SLAB) has been getting a lift after analysts raised their earnings estimates for both the upcoming quarter and full year, signaling growing confidence in the chip maker’s near term recovery path.

See our latest analysis for Silicon Laboratories.

The upbeat revisions seem to be feeding into the tape, with the 7 day share price return of 11.75 percent and year to date share price return of 13.17 percent suggesting momentum is building even though the 3 year total shareholder return is still slightly negative.

If Silicon Labs has caught your eye, this could be a moment to see what else is setting up for growth in high growth tech and AI stocks.

With earnings estimates marching higher and the share price already responding, the key question now is whether Silicon Labs still trades below its true potential or if the recent rally means markets are already pricing in its next leg of growth.

Most Popular Narrative Narrative: 5.9% Undervalued

With Silicon Laboratories last closing at $141.52 against a narrative fair value near $150, the story leans modestly optimistic and hinges on ambitious growth dynamics.

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 see what kind of revenue ramp and margin rebuild would justify such a lofty future earnings multiple? The projections behind this fair value may surprise you.

Result: Fair Value of $150.44 (UNDERVALUED)

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

However, if IoT adoption slows or competition forces down wireless chip pricing, Silicon Labs’ margin recovery and rich valuation assumptions could quickly unravel.

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

Another Lens on Valuation

Analysts see modest upside from today’s price, but our fair ratio on the price to sales metric paints a tougher picture. At 6.3 times sales versus a 5.5 times industry average and a 5.2 times fair ratio, Silicon Labs screens expensive, leaving less room for execution missteps.

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Silicon Laboratories Narrative

If this perspective does not fully align with your own, or you would rather dig into the numbers yourself, you can build a custom view in just a few minutes, Do it your way.

A good starting point is our analysis highlighting 1 key reward 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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