Silicon Motion stock still a buy, Roth says

Following the company’s first quarter results, Roth MKM analyst Suji Desilava remains bullish on Silicon Motion Technology (Silicon Motion Technology Stock Quote, Chart, News, Analysts, Financials NASDAQ:SIMO).

Om May 2, SIMO posted its Q1, 2024 results. The company posted EPS of $0.48 on Net Sales of $189.3-million, a topline that was down 6% over the same period last year.

“Our business remained strong in the first quarter of 2024 as demand was stronger than expected and improving ASPs continued to drive better profitability,” said CEO Wallace Kou. “Our client SSD revenue increased again for the fourth consecutive quarter as end-market demand stabilized and programs with our flash maker customers continue to scale. This was a strong start to 2024, and we are confident that we have the right products and the right customers to continue to grow our business and profitability throughout this year.”

The analyst summarized the quarter he called a “solid beat”.

“SIMO reported above-consensus 1Q24 revenue growth and guided for above-consensus growth in CY24, reflecting recovering memory demand and stabilizing supply chain conditions,” he wrote. “We believe SIMO’s strong smartphone/ PC controller position is benefitting from improved demand visibility in CY24. We also believe improving NAND memory market supply-demand conditions create a tailwind opportunity for steady expected GM recovery.”

In a research update to clients May 3, Desilva maintained his “Buy” rating and price target of $95.00 on SIMO.

The analyst thinks SIMO will post EEPS of $3.45 on revenue of $815.0-million in fiscal 2024. He expects those numbers will improve to EPS of $4.27 on a topline of $906.8-million the following year.

“Our price target of $95 represents an ex-cash CY25 P/E of 18x essentially in-line with the semiconductor median of 16.0x,” the analyst concluded. “Factors that may cause shares of SIMO to deviate from our price target include indication of softening of global memory market or inability to secure wafer as needed to support growth.”