Xilinx’s Stock Jumps 18% as 5G Drives Earnings in Q3



Xilinx’s stock jumps 18% on strong earnings

Today, Xilinx (XLNX) stock is beating the charts with an increase of over 18%, and it’s still growing as its third quarter of fiscal 2019 earnings and guidance beat analysts estimate by a huge margin. The current growth is even beating Xilinx’s 15% growth on October 25, when it released its earnings for the second quarter of fiscal 2019. The strong growth shows how desperate investors are to see a ray of hope amid the uncertain business environment created by the US–China trade war.

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Xilinx is not immune to this uncertainty. It’s seeing demand weakness in the industrial and automotive spaces. However, this weakness is more than offset by strong demand for its advanced high-margin products used for 5G (fifth-generation) deployment in South Korea (EWY) and China. This growth is likely to continue for another year and make Xilinx outperform the market in 2019.

Xilinx’s stock performance in 2019

Xilinx stock has grown over 22% year-to-date to a new 52-week high of $107.65, which is near its bullish price target of $110. We expect Wall Street analysts to upgrade their price targets for Xilinx in the next few days, driving the stock further upward.

It remains to be seen if Xilinx can deliver as strong a performance as Advanced Micro Devices (AMD) in 2018. AMD’s stock rose ~80% in 2018 while the semiconductor industry fell 7.7%.

What’s driving Xilinx stock?

In the third quarter of fiscal 2019, Xilinx’s revenue rose 33.6% YoY (year-over-year) and 7% sequentially to $800 million, beating the analyst estimate and its own guidance of $770 million. The YoY growth was driven by a double-digit increase in all end-markets, with the highest growth coming from Communications and Automotive markets. The sequential growth was driven by double-digit growth in Aerospace and Defense, which was partially offset by weakness in industrial.

Xilinx’s growth comes from 51% YoY growth in the high-margin advanced products, driving its non-GAAP EPS 42% YoY to $0.92. The company expects to cross the $3 billion annual revenue mark in fiscal 2019, which ends in March.

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