Back to top

Image: Bigstock

QuickLogic (QUIK) Up More Than 7%: Can the Rally Continue?

Read MoreHide Full Article

QuickLogic Corporation (QUIK - Free Report) shares surged about 7.5% in yesterday’s trading session, outperforming the market.

In the past six months, the company’s shares have gained 23%, outperforming the industry’s growth of 9.2%.

Will the recent positive trend continue driving the stock over the long haul or is it due for a pullback? Before we discuss how investors and analysts have reacted as of late, let's take a quick look at the recent fundamentals and trends in order to get a better hold on the catalysts.

Growth Drivers

Last quarter (third-quarter 2017), the company reported a loss of 4 cents per share, which was narrower than the year-ago quarter’s loss of 6 cents per share. Revenues of $3 million also increased 6% on a year-over-year basis.

Growing adoption of QuikLogic’s sensor processing solutions and embedded FPGA (eFPGA) Intellectual Property (“IP”) Licensing is a tailwind. The company’s new support center in Taiwan related to eFPGA IP has also helped in developing relationships with prospective customers, which can eventually lead to design wins.

Further, the company’s initiatives for innovation-based expansion of the product portfolio are anticipated to be positive. Additionally, the newly added “barge-in” feature to enhance the company’s EOS S3 Sensor Processing Platform, is expected to boost the top line going ahead. This platform also has three new management positions for product management, hardware solutions architecture and system engineering to enable a focused development process.

During the quarter, the company’s test-chip qualification for SMIC low power 40 nanometer process was completed. The enhancement of the product suite with this new technology is also expected to be a catalyst.

In order to broaden presence in the Chinese market, QuickLogic signed a partnership agreement with a prominent EDA tool and semiconductor IP distributor in China named AcconSys. The latter will provide the company’s flagship ArcticPro embedded FPGA solutions with sales and support services in China. Management is also positive about its IP engagement funnel.

The company is witnessing increasing demand for wearable products in the B2B market, primarily driven by higher demand from hospitals and fitness focused companies, which need to track body activities and biometric information.

Bottom Line

QuickLogic has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in two of the trailing four quarters, recording a positive average earnings surprise of 9.2%.

Further, it has a long-term expected EPS growth rate of 20%.

In our opinion, the stock deserves a place in investor’s portfolio and we are expecting an impressive return from the stock in the next few months.

Zacks Rank and Other Key Picks

QuickLogiccurrently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader technology sector are NVIDIA Corporation (NVDA - Free Report) , DXC Technology Company (DXC - Free Report) and Micron Technology, Inc. (MU - Free Report) , all of which sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

NVIDIA, DXC and Micron have long-term earnings per share growth rate of 10.3%, 10.5% and 10%, respectively.

Wall Street’s Next Amazon

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.

Click for details >>

Published in