Street Calls of the Week
Investing.com - Stifel raised its price target on Semtech Corp. (NASDAQ:SMTC) to $80.00 from $57.00 on Wednesday, while maintaining a Buy rating on the semiconductor company’s stock. The new target represents potential upside from the current price of $71.45, though InvestingPro data suggests the stock is trading above its Fair Value.
The firm cited Semtech’s improved business profile as part of its ongoing turnaround strategy, with additional operating leverage potential expected through calendar year 2025 and beyond. Stifel noted the company’s IoT business segment could benefit from long-term catalysts with a higher mix of software and services revenues. This optimism is supported by Semtech’s strong revenue growth of 22.2% and eight analysts revising their earnings estimates upward.
Stifel highlighted several strategic options available to Semtech, including potential divestiture of lower-margin businesses and tuck-in acquisitions, made possible by the company’s strengthened balance sheet and positive free cash flow generation. With a healthy current ratio of 2.53 and moderate debt levels, the company appears well-positioned for strategic moves. InvestingPro subscribers can access 18 additional key insights about Semtech’s financial health and growth potential.
The recent cost restructuring and debt conversion have created "breathing room" for Semtech, providing flexibility to navigate the current challenging business environment, according to the research firm.
Stifel believes Semtech’s management has multiple avenues to unlock synergies from its LoRa and Sierra Wireless acquisition while continuing to drive growth in targeted applications including data centers, advanced protection, regulatory-driven proximity sensing, and new LoRa markets opened by dual-band products.
In other recent news, Semtech Corp . reported solid performance in its latest quarter, achieving a 20% annual growth with modest upside to consensus estimates on both revenue and earnings per share. The company’s outlook indicated moderate revenue upside, with earnings per share guidance aligning with expectations. Analyst firm UBS reiterated its Buy rating on Semtech, maintaining a $65 price target, noting the company’s data center opportunities remain strong for 2026. Craig-Hallum also raised its price target to $62, highlighting Semtech’s positioning in the AI data center market and upcoming technology deployments. Benchmark increased its price target to $76, maintaining a Buy rating, following discussions with Semtech’s executives about strategic transformations. Additionally, Oppenheimer upgraded Semtech to Outperform, setting a price target of $81, driven by growth opportunities in AI and LoRa technologies. These developments reflect a positive sentiment among analysts regarding Semtech’s strategic initiatives and market positioning.
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