Fed Governor Adriana Kugler to resign
On Tuesday, Semtech Corp . (NASDAQ:SMTC (NASDAQ:SMTX)) saw its price target increased by Stifel from $58.00 to $65.00, while the firm maintained a Buy rating on the stock. The decision followed Semtech's strong third-quarter financial results for fiscal year 2025, ending in October, which surpassed expectations with a 1.6% increase in revenue and non-GAAP earnings per share (EPS) $0.03 higher than anticipated.
The company's outlook for the fourth quarter of fiscal year 2025, ending in January, also appears promising, with a revenue guidance midpoint of $250.0 million. This figure is up by 5.6% quarter over quarter and 8.7% higher than Stifel's previous estimate of $230.0 million. The non-GAAP EPS midpoint is set at $0.32, which is $0.13 higher than earlier estimates, benefiting from improved non-GAAP gross margins and operating margins.
Semtech's recent successes include the production ramp-up of its new Active Copper Cable ( ACC (NS:ACC)) Copper Edge product for NVDA™s Blackwell platform. This product contributed to high-single digit millions in revenue in the third quarter and is expected to continue growing in the fourth quarter, with more moderate growth projected throughout the fiscal year 2026.
Additionally, the industrial segment is forecasted to grow quarter over quarter, driven by continued strength in LoRa and cellular IoT bookings. Although the High-End Consumer segment is anticipated to decline seasonally, robust design activity for Consumer TVS (protection) and PerSe (proximity sensing) is ongoing.
The firm also noted Semtech's consistent execution and focus on strengthening its balance sheet as factors contributing to the positive outlook. The revised 12-month price target of $65 is based on an enterprise value to sales (EV/S) ratio of 5.7x, reflecting Stifel's increased estimates for the calendar year 2025.
In other recent news, Semtech Corporation has been making significant strides in the market with robust financial performance and strategic initiatives. The company's recent financial report showed growth across all segments, with an emphasis on the data center and infrastructure divisions.
Semtech's net sales for the third quarter of fiscal year 2025 reached $236.8 million, a 10% sequential increase, with data center and infrastructure segments seeing sales surges of 58% and 24% respectively. The company's gross margin also improved to 52.4%, and operating income reached $43.4 million.
Analysts from Northland, Needham, and Baird have expressed confidence in Semtech's growth trajectory. Northland raised its price target on Semtech's shares to $60, Needham increased Semtech's price target to $70, both maintaining a positive rating, while Baird reiterated an Outperform rating with a steady price target of $80.00. These adjustments reflect Semtech's strong market positioning and potential for continued growth in the burgeoning field of AI technology and data center-related infrastructure.
Semtech has begun volume shipments of its CopperEdge 200G Linear Redrivers for ACC applications and is receiving initial test and qualification orders for its LPO products. These developments are expected to contribute to Semtech's revenue by the end of fiscal year 2026. These are recent developments that indicate Semtech's strategic focus on high-margin, growth-oriented products and its ability to capitalize on the expanding demands of the data center market.
InvestingPro Insights
Semtech Corp.'s recent performance and positive outlook are further supported by real-time data and insights from InvestingPro. The company's market capitalization stands at $4.02 billion, reflecting investor confidence in its growth potential. InvestingPro Tips highlight that 8 analysts have revised their earnings upwards for the upcoming period, aligning with Stifel's optimistic view on Semtech's future performance.
The stock has shown significant momentum, with a strong return of 17.53% over the last month and an impressive 231.31% over the past year. This aligns with the article's mention of Semtech's strong third-quarter results and positive fourth-quarter guidance. Additionally, the stock is trading near its 52-week high, with its price at 99.44% of the 52-week high, indicating sustained investor enthusiasm.
While the company's P/E ratio is currently negative at -3.9, analysts predict that Semtech will be profitable this year, which could potentially justify the recent price target increase by Stifel. It's worth noting that Semtech's revenue for the last twelve months was $815.31 million, with a gross profit margin of 49.83%, showcasing the company's ability to maintain healthy margins despite challenges.
For investors seeking more comprehensive analysis, InvestingPro offers additional tips and insights, with 13 more tips available for Semtech Corp. These could provide further context to the company's financial health and growth prospects.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.