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QuickLogic Shares Plummet 48.4% Amid Growth Challenges

QuickLogic's stock has plummeted 48.4% YTD, lagging the Zacks industry. The report highlights disappointing growth due to missed revenue projections and increasing cash usage, prompting concerns among investors about the company's future performances.

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AI Rating:   4

QuickLogic (QUIK) has been facing significant challenges affecting its stock performance. As noted in the report, its shares have declined by 48.4% YTD, which is a stark contrast to the Zacks Internet – Software industry's growth of 9% and a much lower performance compared to the Zacks Computer and Technology sector and the S&P 500 index, which returned 13.6% and 14.4%, respectively.

One of the critical issues impacting QuickLogic is the sluggish growth due to scheduling delays. This situation has led to management reducing the revenue outlook for the full-year growth projection, which could adversely affect revenues in the near term. The report suggests that the weakness in QuickLogic's IP contracts, which are still in their deliverable phase, is contributing to lower revenue realization. While there is some anticipation for recovery as the IP contracts are expected to contribute to the top line from the fourth quarter, the near-term outlook remains pessimistic. As a consequence, the anticipated contribution from the company's Storefront and Chiplet business is also pushed to early 2025, which further complicates the company’s revenue prospects.

The report elaborates on the company's cash usage, indicating a higher-than-anticipated cash burn in the second quarter due to the timing of payments related to its Strategic Radiation Hardened FPGA government contract. Consequently, the company’s cash reserves have decreased from $27.4 million to $23.3 million, which raises liquidity concerns.

Moreover, QuickLogic is facing increased competition in the Rad-Hard FPGA market, which is dominated by larger companies such as Advanced Micro Devices (AMD), Microchip Technology (MCHP), and Intel (INTC). These competitors have the resources to invest substantially in optimizing their products, which presents a significant challenge for QuickLogic, especially since it operates as a fabless company, making it more vulnerable to external pressures.

Lastly, the report highlights that QuickLogic’s stock carries a Value Score of F, suggesting it is currently overvalued. Overall, given the sluggish growth outlook, lower revenue realization, liquidity issues, and rising competition, investors are advised to approach QuickLogic stocks cautiously, opting to stay away from investing in the stock currently rated as a Zacks Rank #4 (Sell).

Stocks:  QUIK AMD MCHP INTC