Semtech stock holds positive rating, $60 target from Susquehanna

On Wednesday, Susquehanna maintained a Positive rating on Semtech Corp . (NASDAQ:SMTC) with a steady price target of $60.00. Trading at $38.78, the stock has shown significant volatility, with a 52-week range of $24.05 to $79.52. According to InvestingPro analysis, Semtech is currently trading near its Fair Value, with analysts setting targets between $43 and $68. The firm’s outlook remains optimistic despite near-term challenges, as they foresee growth in several of Semtech’s product areas. Susquehanna highlighted the company’s engagement with NVIDIA (NASDAQ:NVDA) for future rack generations, potentially including the Kyber project in late 2027.

Semtech reported results that met expectations, with strong performance in its LoRa technology compensating for weaker Internet of Things (IoT) outcomes. While the company posted revenue of $909.29 million with a healthy gross margin of 51.21%, InvestingPro data reveals the company maintains strong liquidity with a current ratio of 2.07, indicating solid short-term financial stability. The company is preparing for the ramp-up of new Analog Chipset Controller ( ACC (NSE:ACC)) applications and Low Power Optical (LPO) technology in the latter half of the year. Additionally, the SurgeSwitch technology is expected to gain traction in the fall, which could drive further acceleration across various device manufacturers.

The firm noted that Semtech’s Data Center (DC) segment grew into April and is projected to continue this trend into July, bolstered by the FiberEdge TIA and drivers, as well as TriEdge CDRs. High-End Consumer segment, including Consumer Transient Voltage Suppression (TVS) devices, is expected to grow quarter over quarter in July due to smartphone seasonality. The company is also enthusiastic about the prospects of PerSe proximity sensing technology, particularly for applications like smart glasses.

Despite a demand gap for CopperEdge, due to changes in NVIDIA’s architecture, Semtech remains engaged for future opportunities. The company is also in late-stage qualifications with multiple ASIC customers for ACCs, with volume increases anticipated by the end of the year. Management remains committed to debt reduction, having prepaid $10 million of term loan principal in April and an additional $15 million as of July, resulting in an adjusted net leverage ratio below 2.

In summary, Susquehanna’s reaffirmation of a Positive rating and a $60 price target is based on the growth potential of Semtech’s diverse product portfolio, including DC, LoRa, and Cellular IoT, as well as upcoming opportunities in LPO/LRO/CPO technologies and new handset applications. InvestingPro subscribers have access to 10+ additional exclusive insights about Semtech, including detailed analysis of its growth prospects and comprehensive financial health metrics. Get the full picture with InvestingPro’s detailed research report, available for over 1,400 US stocks.

In other recent news, Semtech Corporation reported a robust performance for the first quarter of fiscal year 2026, with earnings per share (EPS) of $0.38, surpassing the forecast of $0.37. The company achieved revenue of $251.1 million, exceeding expectations and marking a 22% increase year-over-year. Needham analysts maintained a Buy rating with a $54 price target, praising the strong results and positive guidance for the next quarter. Stifel analysts also raised their price target from $42 to $45, reflecting confidence in Semtech’s financial health and growth prospects.

Semtech’s data center products, particularly FiberEdge and CopperEdge, contributed significantly to this strong performance. Despite a temporary decline in LoRa-enabled solution sales due to a medical customer’s inventory build-up, the company expects to maintain a steady revenue run rate for its LoRa technology. Stifel anticipates improvements in non-GAAP operating margins and EPS growth outpacing revenue growth in the coming years.

The company continues to focus on AI connectivity and LoRa technology, projecting second-quarter net sales of $256 million, plus or minus $5 million. Semtech’s next-generation ACC products, branded as CopperEdge, have been attracting interest for their extended reach and higher speeds. Overall, the company remains optimistic about continued growth driven by strategic investments in research and development and the expansion of its market presence.

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