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Will Communications Market Boost Xilinx (XLNX) Q4 Earnings?

Zacks Equity Research

Xilinx XLNX has been benefiting from broad-based growth across most of its end markets.

However, the company’s fourth-quarter fiscal 2019 results, scheduled to be released on Apr 24, are likely to be driven by strong demand for its products, particularly in the Communications and Test, Measurement & Emulation (TME) markets.

Notably, the company derives majority of its revenues from the Communications market, which are likely to remain strong this quarter under review as well.

Click here to see how the company’s overall fourth-quarter performance is likely to be.

Communication Holds the Key

Xilinx is benefiting from strong growth in the Wireless market, backed by the early 5G production and pre-5G deployments. LTE upgrades in both radio and baseband applications are also a key driver.

Notably, 5G deployments in South Korea and a very early start to the ramp-up of the same in China are boosting the company’s results. Nonetheless, the strength in wireless is witnessed in all Tier 1s across all the geographies.

The company’s focus on providing customers with solutions that drive high value services is likely to drive the upcoming quarterly results.

During the fiscal fourth quarter, Xilinx and Samsung Electronics expanded collaboration, which resulted in the world's first commercial deployment of 5G New Radio (NR) in South Korea.

Moreover, the company extended Zynq UltraScale+ Radio Frequency (RF) System-on-Chip (SoC) portfolio with greater RF (radio frequency) performance and scalability.

We believe, the growing usage of Zynq RFSoCs and ACAP products for 5G deployments is likely to remain a key growth-booster.

Further, significant growth in wireless is also likely to help the company offset the anticipated revenue decline in the wired this reporting cycle.

Xilinx, Inc. Price and EPS Surprise

Xilinx, Inc. Price and EPS Surprise | Xilinx, Inc. Quote

Zacks Rank and Other Stocks to Consider

Currently, Xilinx has a Zacks Rank #2 (Buy). A few other top-ranked stocks in the broader Computer and Technology sector are MeetMe, Inc. MEET, Cadence Design Systems, Inc. CDNS and Alteryx, Inc. AYX, all 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 MeetMe, Cadence and Alteryx is projected at 20%, 12% and 15.4%, respectively.

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