Silicon Motion Technology Receives Strong Buy Rating and Increased Price Target

B. Riley Securities's Craig Ellis raised their price target on Silicon Motion Technology (NASDAQ: SIMO) by 4% from $101 to $105 on 2024/05/06. The analyst maintained their Strong Buy rating on the stock.

After reviewing Silicon Motion Technology's 2024/05/03-dated Q1 2024 earnings report, Ellis noted that management's Q2 guidance was higher than consensus and the quarter's upside was of "good quality."

For Q1 2024, Silicon Motion Technology reported earnings per share (EPS) of $0.64, beating the Zacks Consensus Estimate of $0.58 and showing a significant increase of 93.9% compared to Q1 2023's $0.33. The company also reported revenue of $189.3 million, surpassing the Zacks Consensus Estimate by 5% and demonstrating a substantial 53% growth compared to Q1 2023's $124.1 million. Additionally, Silicon Motion Technology achieved a gross margin of 45.0% and an operating margin of 12% during the quarter.

Looking ahead, management provided guidance for Q2 2024, projecting revenue in the range of $199 million to $208 million. If achieved, this would represent a remarkable 42% to 48% increase year-over-year. The company also expects to maintain a gross margin of 45.0% to 46.0% and an operating margin of 16.5% to 17.5% during the second quarter. For the full fiscal year 2024, Silicon Motion Technology anticipates revenue between $800 million and $830 million, a projected growth of 25% to 30% compared to the previous year. The company aims to achieve a gross margin of 45.0% to 47.0% and an operating margin of 14.7% to 16.7% for the fiscal year.

President & CEO Wallace Kou expressed confidence in the company's performance and stated, "Our business remained strong in Q1 2024 as demand was stronger than expected and improving ASPs continued to drive better profitability. 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."

In addition to Craig Ellis's rating and price target update, several other analysts have also revised their outlook on Silicon Motion Technology. Ray Wu of Morgan Stanley raised their price target by 49.2%, from $59 to $88, and upgraded their rating on the stock from Hold to Strong Buy. Mehdi Hosseini of Susquehanna increased their price target by 10%, from $100 to $110, while maintaining their Strong Buy rating. Anthony Stoss of Craig-Hallum raised their price target by 20%, from $80 to $96, and maintained their Buy rating on the stock.

Overall, all top-rated analysts currently rate SIMO as a Strong Buy or Buy, with no analysts suggesting a Hold or recommending selling the stock.

Since Silicon Motion Technology's latest quarterly report on 2024/05/03, the stock price has risen by 6.3%. Furthermore, the stock has seen a year-over-year increase of 30.4%, outperforming the S&P 500, which has grown by 25.2% during the same period.

B. Riley Securities analyst Craig Ellis, who raised the price target and maintained the Strong Buy rating on Silicon Motion Technology, is ranked in the top 1% of Wall Street analysts by WallStreetZen. With an average return of 26.3% and a win rate of 53.2%, Ellis specializes in the Healthcare and Industrials sectors, among others.

Silicon Motion Technology Corporation is a leading designer, developer, and marketer of NAND flash controllers for solid-state storage devices. The company offers controllers for computing-grade solid state drives (SSDs), enterprise-grade SSDs used in data centers, mobile embedded storage for smartphones and IoT devices, flash memory cards, flash drives, and specialized SSDs for industrial, commercial, and automotive applications. Silicon Motion Technology operates internationally, serving NAND flash makers, module makers, hyperscalers, and original equipment manufacturers (OEMs).

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