Semtech stock price target cut to $54 at Needham

On Monday, Needham analysts adjusted their outlook on Semtech Corp . (NASDAQ:SMTC) by lowering the price target to $54 from the previous $74 while still maintaining a Buy rating on the stock. According to InvestingPro data, SMTC (NASDAQ:SMTX) shares have experienced significant volatility, dropping 14.1% in the past week despite a remarkable 159.57% gain over the last year. The revision follows Semtech’s disclosure on Friday that its forecast for net sales from its CopperEdge products used in 1.6T active copper cables (ACCs) for FY26 would likely fall short of the earlier floor case estimate of $50 million.

The company’s update was communicated through a Form 8-K filing, which indicated a reduction in the single-use-case total addressable market (TAM) for FY26, leading to Semtech’s stock indicating around $40 in premarket trading. This announcement has prompted Needham analysts to remove all CopperEdge revenue from their financial model until there is clearer insight into the adoption and new use cases of the product. InvestingPro subscribers can access detailed financial health metrics and 10+ additional ProTips that provide crucial insights into SMTC’s market position and growth potential.

Semtech’s management has expressed expectations of generating revenue from CopperEdge linear equalizers in FY26 and beyond. However, given the significance of the ACC/linear equalizer opportunity as a major near-term revenue driver for Semtech, the elimination of this revenue stream could potentially compress the company’s valuation multiple.

The new price target of $54 is based on a 30x multiple of Needham’s "worst case" calendar year 26 non-GAAP EPS estimate of $1.80. The analysts’ decision reflects caution due to the less certain revenue prospects for Semtech’s CopperEdge products, despite the maintained Buy rating which suggests a continued positive long-term outlook on the company’s stock.

In other recent news, Semtech Corporation has seen a series of developments. The company announced a downward revision of its fiscal year 2026 net sales forecast for its CopperEdge products, following changes in server rack architecture and customer feedback. Despite this, Semtech plans to diversify its CopperEdge portfolio across multiple customers and applications. In response to this, Stifel analyst Tore Svanberg and Needham analyst N. Quinn Bolton both lowered their price targets on Semtech, maintaining a Buy rating.

In other developments, Semtech has appointed Jason Green as its new executive vice president and chief commercial officer. Green will be responsible for overseeing the company’s global sales, marketing, and go-to-market strategy.

Piper Sandler reaffirmed an Overweight rating for Semtech, citing the company’s strong growth trajectory in Asset Control Center solutions and Link Performance Optimization products. The company’s management has also emphasized strategic divestitures to optimize its balance sheet.

Lastly, Semtech successfully raised an estimated $640.7 million in net proceeds through a follow-on offering of common stock, which is expected to significantly reduce its annual interest expenses and lower its net leverage ratio. Needham maintained a positive outlook on Semtech, increasing the stock’s price target and reiterating a Buy rating.

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