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QuickLogic (QUIK) Fully Exercises Stock Overallotment Option

Zacks Equity Research

QuickLogic Corporation QUIK announced that the underwriters have purchased 2.4 million extra shares by fully exercising their option. The company provided them the option during its recent common stock public offering — with no slated closing date — which is subject to customary closing conditions.

QuickLogicreceived net proceeds of $1.12 million from the sale of additional shares, after making adjustments of discounts related to underwriting. The company raised a net amount of $8.56 million from the recently announced public offering, which included the full exercising of over-allotment option to the underwriters.

Including the over-allotment, the company now has 115,996,771 shares outstanding. Oppenheimer & Co. Inc. will be the underwriter of the offering. The company plans to utilize the net proceeds from this offering primarily to fund future acquisitions, to provide for its working capital and general corporate purposes. Moreover, it also intends to utilize part of the net proceeds for the expansion of its next generation new products.

QuickLogic has been executing strategic acquisitions to diversify offerings and expand operating markets. The company acquired SensiML Corporation in January this year in an all-stock deal. The buyout is anticipated to empower QuickLogic’s product portfolio with machine-learning (ML) tools required to devise embedded algorithms.

Last year in December, the company enhanced balance-sheet strength by amending its revolving credit facility agreement with Heritage Bank of Commerce. Per the latest terms of the loan and security deal, QuickLogic increased the total revolving credit capacity by $6 million to reach a total of $15 million.

Backed by the raised facility, QuickLogic is likely to enhance its innovation-driven QuickAI platform with robust functionalities.

QuickLogic Corporation Price and Consensus

QuickLogic Corporation Price and Consensus

QuickLogic Corporation price-consensus-chart | QuickLogic Corporation Quote

What Investors Should Know?

The company is gaining from increasing adoption of QuickLogic’s sensor processing solutions and embedded FPGA (eFPGA) IP Licensing solutions. Strength in the latest endpoint AI platform is an added positive.

Notably, the company exited the first quarter of fiscal 2019 (ending Mar 31, 2019) with cash and cash equivalents of $23.1 million compared with $26.4 million registered in the previous quarter. Moreover, the company has no long-term debt.

We believe raising funds will help the company to bolster balance sheet and utilize resources to expand relationships with prospective customers, which will eventually lead to design wins.

Meanwhile, QuickLogic’s strength in smartphone market and increasing demand for wearable products in the B2B market bode well. Furthermore, the company is working with a Japanese smartphone OEM, which is expected to adopt QuickLogic’s EOS S3 SoC for its new models scheduled to be launched in 2020.

However, consolidating semiconductor market and stiff competition from notable eFPGA chip makers, including Intel INTC and Xilinx XLNX, among others, remains a concern.

Zacks Rank and Another Stock to Consider

QuickLogiccarries a Zacks Rank #2 (Buy).

Another top-ranked stock in the broader technology sector is Match Group, Inc. MTCH, flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Match Group has a long-term earnings growth rate of 15.2%.

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