MaxLinear (MXL -0.43%) stock is getting crushed Thursday on the heels of the company's recent earnings report trading. The semiconductor specialist's share price was down 20.5% as of 12:45 p.m. ET, according to data from S&P Global Market Intelligence.
MaxLinear published third-quarter results after the market closed yesterday, posting sales and earnings performance that fell far short of the market's expectations. The company also received a ratings downgrade from a high-profile analyst firm. After the underwhelming results and negative analyst coverage, the company's stock is seeing big sell-offs today.
What's driving the big sell-off for MaxLinear stock?
MaxLinear reported non-GAAP (adjusted) earnings per share of $0.02 on sales of $135.5 million. For comparison, the average analyst estimate had guided for the company to record adjusted earnings of $0.04 per share on sales of $139.77 million. The company's revenue was down 52.6% year over year in the quarter, and management noted that it was continuing to see relatively weak demand and headwinds stemming from high inventory levels.
For the fourth quarter, management is guiding for sales to come in between $115 million and $135 million. On a sequential basis, the midpoint of its target range suggests a roughly 7.7% sales decline. Compared to last year's fourth-quarter performance, the midpoint of the company's sales guidance suggests a 57% decline from the $290.6 million in sales that the business posted in Q4 last year.
Following the uninspiring performance and guidance, a Roth Capital analyst lowered the firm's rating on the stock from buy to neutral. All in all, the last day has delivered a slew of concerning news for MaxLinear shareholders.
Is now the time to buy MaxLinear stock?
MaxLinear stock is now down 57% across 2023's trading. The company's valuation has been pushed down to levels that look cheap by some metrics, but it's hard to get excited about the business right now.
MXL PE Ratio (Forward) data by YCharts
Even though MaxLinear trades at just 12 times this year's expected earnings and roughly 1.7 times expected sales, business performance appears to be in free fall. The semiconductor industry tends to be highly cyclical, as does the connectivity and communication chip niche that the company specializes in, but the scope of the recent sales declines and the commentary indicating that inventory headwinds could continue for longer than anticipated paint a discouraging picture.
