Semtech stock price target cut to $60 at UBS

On Friday, UBS analysts adjusted their outlook on Semtech Corp . (NASDAQ: NASDAQ:SMTC (NASDAQ:SMTX)), a $3.2 billion market cap semiconductor company currently trading at $37.48, reducing the price target to $60 from $65 while maintaining a Buy rating. According to InvestingPro data, the stock has shown significant price volatility, with a YTD return of -47.11%. The decision followed Semtech’s January-quarter earnings report, which met expectations despite lighter Signal Integrity revenue and better Internet of Things (IoT) performance. With annual revenue of $909.3M and a healthy gross margin of 51.2%, the company maintains strong operational metrics. The company’s April-quarter guidance was also in line with Wall Street predictions, providing some relief after concerns were raised last month when Semtech indicated a delay in the ramp-up of its NVDA CopperEdge shipments to Rubin.

UBS’s analysis suggested that while CopperEdge shipments will be minimal this year, over 20 customers are considering the technology, and FiberEdge is gaining momentum. Additionally, the firm noted positive fundamentals in markets outside the data center, such as Passive Optical Network (PON), IoT, and smartphones. The main uncertainty revolves around potential further delays for CopperEdge at Rubin. However, UBS believes that the Rubin rack’s design, which requires maintaining signal integrity over greater distances, reduces the likelihood of a significant setback. Even if NVDA were to dual source, UBS anticipates a significant ramp-up in calendar year 2026.

The revised earnings per share (EPS) forecast for fiscal year 2026 and calendar year 2025 was trimmed by approximately 4% due to a moderated Signal Integrity ramp. Nonetheless, the long-term forecast remains largely unchanged. The price target adjustment to $60 reflects softer comparative multiples, but UBS still finds the risk-reward balance at these levels to be quite appealing and reaffirms its Buy rating on Semtech shares. InvestingPro analysis indicates the stock is currently overvalued, with additional insights available in the comprehensive Pro Research Report, which covers over 1,400 US stocks with detailed financial health metrics and expert analysis.

In other recent news, Semtech Corporation reported its fourth-quarter fiscal year 2025 earnings, surpassing market expectations with an earnings per share (EPS) of $0.40, exceeding the forecasted $0.33. The company achieved a revenue of $251 million, marking a 6% sequential increase, which was slightly above the anticipated $250.18 million. Despite this strong performance, Semtech’s outlook for the first quarter of fiscal year 2026 suggests a slight revenue decrease to $250 million, attributed to challenges with its CopperEdge anchor customer. Analysts at Stifel adjusted their 12-month price target for Semtech, reducing it from $60 to $54 while maintaining a Buy rating, reflecting a cautious optimism about the company’s long-term growth prospects. Semtech’s management has been actively aligning research and development with high-growth markets, which is expected to support future market share expansion. The company also reported significant growth in its LoRa technology sector, with a 205% year-over-year revenue increase, highlighting its competitive edge. Additionally, Semtech reduced its net debt by 68% to $411 million, showcasing strong financial management. Looking forward, Semtech plans to focus on R&D in data center and LoRa technologies, anticipating growth in linear pluggable optics.

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