Silicon Motion Technology Corporation (SIMO - Free Report) recently reported preliminary first-quarter fiscal 2018 results. The company anticipates revenues at the mid-point of the previous guidance of $127-$132 million issued on Feb 6. The Zacks Consensus Estimate for revenues is currently pegged at $129.9 million.
The revenue guidance originally reflected a fall of 3-7% on a sequential basis, driven by falling NAND prices and seasonal decline in SSD solutions.
Moreover, non-GAAP gross margin is now expected to be near the higher-point of the company's original range of 46.5-48.5%.
The company is scheduled to release full first-quarter 2018 financial results on Apr 26.
Silicon Motion Outperforms
Silicon Motion shares have gained 0.23% in the past month, outperforming the industry’s decline of 11.8%.
Silicon Motion remains well-poised for growth, driven by synergies from acquisitions and improving NAND supply environment.
Management expects the increase in the availability of 64 layer 3D NAND to bring down high NAND prices, which will eventually enhance results. Improved supply of NAND flash is anticipated to drive growth of Ferri and Shannon SSD solutions. Additionally, as the company’s pipeline product, second generation PCIe NVMe client SSD controllers, enter into production, Client SSD Controller sales are anticipated to increase.
Silicon Motion is active on the acquisitions front too. The company’s buyouts include FCI, Centronix mobile tv and Shannon systems. These acquisitions have helped it to augment foothold in the mobile communications market.
Moreover, the company outshines peers in providing resources for research and development. It develops affordable versions of TLC NAND flash as well as high-density 3D NAND. Moreover, Silicon Motion’s robust liquidity position has allowed the company to undertake diligent capital deployment initiatives that supplement long-term growth.
We also believe that an expanding product portfolio is the key catalyst.
Zacks Rank & Key Picks
Silicon Motion carries a Zacks Rank #3 (Hold).
Amazon.com, Inc. (AMZN - Free Report) , Western Digital Corporation (WDC - Free Report) and Applied Materials, Inc. (AMAT - Free Report) are some better-ranked stocks in the same sector. All the three companies flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Amazon.com, Western Digital and Applied Materials have a long-term earnings growth rate of 26.8%, 19% and 13.3%, respectively.
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