Xilinx, Inc. (XLNX - Free Report) recently updated its guidance for the first quarter of fiscal 2021. Improved revenue guidance amid the prevalent market uncertainties highlights the company’s strong operating abilities.
The company expects revenues between $720 million and $734 million. The midpoint of the guidance indicates a decline of 14.5% from the 2019 reported figure. Prior to this, concurrent with the fourth-quarter fiscal 2020 earnings release, Xilinx had anticipated revenues between $660 million and $720 million.
While the company is witnessing some COVID-19-related impacts presently, stronger-than-expected sales in Wired and Wireless Group (WWG) and Data Center Group (DCG) are covering for weak sales in consumer-oriented end markets, including automotive, broadcast and consumer.
Moreover, the recent ease of restrictions on sales of certain products to international customers is resulting in accelerated customer orders and boosting the top line.
Furthermore, Xilinx updated that the expected tax rate for the fiscal first quarter will account for the potential impacts of a third-party legal proceeding, involving Altera Corp. and Commissioner. The tax rate is expected between 11% and 13% compared with the earlier predicted range of 9-11%.
Again, operating expenses are expected to be $310-$316 million, slightly higher than the previously guided range of $307-$311 million.
Notably, Xilinx is benefiting from its strong product portfolio and product launches. It recently launched two real-time computing video appliances for scalable, ultra-high-density video transcoding applications. With the manifold increase of virtual meetings, remote learning sessions, seller broadcasts and other forms of streaming, bandwidth costs are surging, weighing heavily on service providers. Xilinx’s appliances claim to help service providers meet the rising demand for optimized architectures at minimal costs.
Moreover, the company’s exposure to Telecom & Wireless vertical markets bodes well with the onset of 5G. Notably, in April, Xilinx announced that Samsung Electronics adopted the Xilinx Versal adaptive compute acceleration platform (ACAP) to roll out 5G worldwide. Moreover, the growing usage of Zynq RFSoCs and ACAP products for 5G deployments by both basebands and radios is a positive.
Zacks Rank & Stocks to Consider
Xilinx currently carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the broader technology sector are SYNNEX Corporation (SNX - Free Report) , Fortinet, Inc. (FTNT - Free Report) and Baozun Inc. (BZUN - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for SYNNEX, Fortinet and Baozun is currently pegged at 9.37%, 14% and 29%, respectively.
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