Silicon Labs Valuation Getting High?

Silicon Laboratories (SLAB) shares are coming under pressure this morning after Citigroup’s Craig Ellis cut his rating on the stock to Hold from Buy on a valuation basis. He notes that the shares had come within 3% of his $44 price target.

Ellis notes that he remains positive on the chip company’s growth initiatives and margin progress, but that his thesis - organic revenue growth, operating margin gains, stock buyback and balance sheet flexibility - “appears increasingly discounted” after a 45% rise in the stock off its first quarter lows.

Ellis says he is not making the call based on third quarter earnings, which he says should be in line with expectations. He sees revenue of $82.8 million and EPS of 30 cents.

Silicon Labs today is down $1.52, or 3.6%, at $41.33.