QuickLogic Corporation QUIK has announced its plan to raise funds through an underwritten public offering. Oppenheimer & Co. Inc. will be the underwriter of the offering. Further, the company has allowed a 30-day window to the underwriter for the additional purchase of shares of common stock.
The provider of ultra-low power, comprehensive, flexible sensor processing solutions 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 use part of the net proceeds for the expansion of its next generation new products.
The offering, which is subject to customary closing conditions, has no expected closing date.
QuickLogic has been executing strategic acquisitions to diversify offerings and expand operating markets. The company in January this year acquired SensiML Corporation 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.
QuickLogic Corporation Price and Consensus
QuickLogic Corporation price-consensus-chart | QuickLogic Corporation Quote
Increasing adoption of QuikLogic’s sensor processing solutions and embedded FPGA (eFPGA) Intellectual Property (IP) Licensing is a tailwind. The company’s new support center in Taiwan related to eFPGA IP has also aided it in developing relationships with prospective customers, which can eventually lead to design wins.
Further, the acquisition synergies will help QuickLogic to explore emerging markets, including AI in edge computing and IoT endpoint devices.
Notably, per ResearchAndMarkets report, “global AI in embedded IoT devices market” is anticipated to advance to nearly $26.2 billion by 2023. Moreover, the report predicts that by 2023, semiconductors and embedded devices exceeding 87 billion units “will be shipped in support of IoT”.
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.
The company reported a loss in first-quarter of fiscal 2019. Moreover, revenues missed the Zacks Consensus Estimate.
Further, consolidating semiconductor market and stiff competition from notable eFPGA chip makers, including Intel and Xilinx XLNX, among others, remains a concern.
Additionally, QuickLogic’s eFPGA and SoC development, and enhancement efforts to stay afloat in the competitive market are resulting in higher capital expenditures, which remain an overhang on margin expansion.
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 boost balance sheet and utilize resources to expand relationships with prospective customers, which will eventually lead to design wins.
Zacks Rank & Other Key Picks
QuickLogic carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader technology sector are Match Group, Inc. MTCH and Autohome Inc. ATHM, both flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Match Group and Autohome have a long-term earnings growth rate of 15.2% and 20.9%, respectively.
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