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What's in Store for QuickLogic (QUIK) This Earnings Season?

QuickLogic Corporation QUIK is set to report third-quarter 2017 results on Nov 8.

Last quarter, the company reported a loss of 5 cents per share, which was in line with the Zacks Consensus Estimate. Revenues increased 11.4% year over year to $3 million and met the Zacks Consensus Estimate.

Management lowered guidance for the third and fourth quarters of 2017, primarily due to delay in certain key design wins. However, the company believes that growth drivers in the wearable, hearable and IoT applications remain intact.

For the third quarter, QuickLogic expects to generate revenues of $3 million (+/-10%). New product revenues are forecast to be almost $1.7 million, while mature product revenues are projected to be $1.3 million.

Gross margin is anticipated to be approximately 45% (+/- 3%), benefiting from recognized IP license revenues and a favorable mix of customers and products.

Let's see how things are shaping up for this announcement.

Factors at Play

The growing adoption of QuikLogic’s sensor processing solutions and embedded FPGA (eFPGA) Intellectual Property (IP) Licensing is a tailwind for the company. The company’s new support center in Taiwan related to eFPGA IP has also helped to develop relationships with prospective customers, which can eventually lead to design wins.

The company’s initiatives for innovation-based expansion of the product portfolio are anticipated to be a positive. Additionally, the newly added “barge-in” feature to enhance the company’s EOS S3 Sensor Processing Platform, is expected to boost the top line going ahead. This platform also has three new management positions for product management, hardware solutions architecture and system engineering to enable a focused development process.

During the third quarter, the company announced the availability of eFPGA technology on SMIC 40nm Low Leakage (40LL) process, the first-of-its kind offering. The enhancement of the product suite with this new technology is also expected to be a catalyst for the company.

Earnings Whispers

Our proven model does not conclusively show that QuickLogic is likely to deliver a positive surprise this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here as you will see below:

Zacks ESP: QuickLogic’s Earnings ESP is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 5 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: QuickLogic’s Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are a few companies that you may want to consider as our model shows that these have the right combination of elements to deliver an earnings beat in their upcoming release:

NVIDIA Corporation NVDA with an Earnings ESP of +1.60% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.      

Adobe Systems Incorporated ADBE with an Earnings ESP of +0.25% and a Zacks Rank #1.

Cognex Corporation CGNX with an Earnings ESP of +0.10% and a Zacks Rank #1.

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