stock reversed earlier gains on Wednesday, despite the German chip maker raising its revenue outlook, citing strong demand for headphones, fitness trackers, and smartwatches.
The Frankfurt-listed chip designer said it expects to report revenue of $386 million in the third quarter, above its previous forecast of $340 million to $380 million. The stock climbed 5% in early trading, before slipping back to trade 0.5% lower for the day as European markets fell.
chip supplier said strong demand for headphones, fitness trackers, digital watches, notebooks, and tablets was behind the upgraded guidance. It expected the improving trends across its portfolio to extend into the fourth quarter of the year. The update didn’t mention smartphones but Apple is expected to launch its new family of iPhones at an online event on Oct. 13, which should also help demand in the coming months.
The company also raised its revenue outlook in June in the run up to its second-quarter results, citing the global shift to a “work and learn from home” environment. The stock then rose 9% in a single day in August when its second-quarter revenue and third-quarter outlook beat analysts’ expectations. The company, which also supplies
smartphones, will publish third-quarter results, and perhaps more intriguingly, fourth-quarter guidance on Nov. 5.
Looking ahead. Bryan Garnier analysts said Dialog Semiconductor had Apple to thank for the raised expectations, as the technology giant accounted for between 55% and 60% of its revenue.
“We believe the solid demand in personal electronics mainly stems from Apple’s product line, which continue to take advantage of work-from-home and education-from-home,” they said. Dialog’s update added weight to their positive call on chip suppliers, they noted.
Upbeat fourth-quarter guidance can now be expected, Hauck & Aufhäuser analyst Christian Sandherr said, but there were more reasons to be positive into next year.
“Beyond Q4 this year, Dialog looks set to notably benefit from the expected recovery of the global smartphone market, which is seen to be supported by an economic recovery and rising adoption rates of 5G,” he said, rating the stock a buy with a target price of €48.50, compared with Tuesday’s closing price of €39.73.