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On Thursday, Stifel analysts adjusted their outlook on Semtech Corp . (NASDAQ:SMTC) shares, raising the 12-month price target to $42 from the previous $32, while reiterating a Buy rating on the stock. Currently trading at $37.79, InvestingPro analysis indicates the stock is slightly undervalued. This revision reflects a positive assessment of the company’s potential performance and profitability in the coming year.
Stifel’s analysis suggests that Semtech could deliver April quarter results that align with expectations, driven by quarter-over-quarter revenue growth in its Infrastructure segment, particularly in Data Centers. With a current ratio of 2.07 and revenue growth of 4.67% in the last twelve months, the company maintains strong liquidity. Additionally, a modest seasonal increase is anticipated in the High-End Consumer segment, while a seasonal decline is expected in the Industrial segment, especially in the Internet of Things (IoT) area.
The analysts anticipate that Semtech might guide July quarter revenue in line with their estimates, with a slight potential for upside. This outlook is supported by recent positive commentary from hyperscalers, as well as constructive insights from Stifel’s meeting with Semtech’s management at the Optical Fiber Communication Conference and Exhibition (OFC) in 2025.
Stifel’s continued endorsement of a Buy rating and the upward price target adjustment to $42 are based on the belief that Semtech’s business could undergo significant changes and become substantially more profitable in the calendar year 2025. While currently unprofitable, InvestingPro data shows analysts expect positive earnings this year, with an EPS forecast of $1.70 for FY2026. The new target price represents a 3.6 times enterprise value to sales multiple for the expected calendar year 2026. For deeper insights into Semtech’s valuation and growth prospects, check out the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Semtech Corporation has expanded its revolving credit facility, increasing its borrowing capacity by $117.5 million to a total of $455 million. This financial maneuver is part of the company’s strategy to maintain a strong balance sheet and ensure financial flexibility. Additionally, Semtech has reported a 99.95% network uptime for 2024, thanks to its AI-driven network tools, which enhance security and optimize performance. In the realm of stock analysis, Stifel has adjusted its price target for Semtech from $54 to $35, maintaining a Buy rating due to anticipated long-term profitability improvements. Meanwhile, Morgan Stanley (NYSE:MS) has initiated coverage with an Equalweight rating and a $30 price target, citing challenges such as management shifts and economic headwinds. Despite these challenges, Morgan Stanley sees potential in Semtech’s data center market opportunities, projected to account for 16% of its business in 2024. Semtech’s diverse portfolio, including IoT and consumer semiconductor products, faces the impact of volatile macroeconomic conditions and newly introduced tariffs. These developments reflect the dynamic landscape Semtech navigates as it positions itself for future growth.
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