Stifel raises Semtech stock price target to $42, maintains buy rating

On Monday, Stifel analysts adjusted their outlook on Semtech Corp . (NASDAQ:SMTC), increasing the 12-month price target to $42.00 from the previous $35.00, while reiterating a Buy rating on the shares. According to InvestingPro data, the stock currently trades at an EV/EBITDA multiple of 34.1x, with a market capitalization of $3.2 billion. Despite recent volatility, with the stock down nearly 8% in the past week, analysts maintain an optimistic consensus recommendation of 1.64 (Strong Buy). With earnings due in just 3 days, the firm’s analysts anticipate Semtech could deliver April quarter results that align with expectations. This forecast is based on sequential revenue growth in the Infrastructure sector, particularly from Data Centers, and a modest quarter-over-quarter increase from High-End Consumer segments due to seasonal patterns. InvestingPro analysis reveals the company maintains healthy liquidity with a current ratio of 2.07, while achieving a solid gross profit margin of 51.2%. However, they also predict a seasonal quarter-over-quarter decline in the Industrial sector, especially in the Internet of Things (IoT).

The analysts expect Semtech to guide revenue for the July quarter in line with their estimates, with a slight potential for upside. This outlook is supported by recent positive commentary from hyperscalers and insights from a meeting with Semtech’s management at the Optical Fiber Communication Conference (OFC) in 2025. The positive sentiment from these sources underpins Stifel’s expectations.

Stifel’s analysis suggests that Semtech’s business could undergo a significant transformation, becoming substantially more profitable by the calendar year 2025 (CY25E). This aligns with InvestingPro data, which indicates expected net income growth and forecasts EPS of $1.70 for FY2026. InvestingPro subscribers have access to 8 additional key insights about Semtech’s financial health and growth prospects through the comprehensive Pro Research Report, along with detailed analysis of 1,400+ other US stocks. The new price target of $42 reflects a 3.6 times enterprise value to sales multiple for the calendar year 2026 estimates (CY26E EV/Sales).

Semtech is a supplier of analog and mixed-signal semiconductor products that play a critical role in the development of infrastructure, high-end consumer products, and industrial equipment. With revenue of $909 million in the last twelve months and a 4.7% growth rate, the company’s performance and guidance are closely watched indicators of demand and growth within these sectors.

The updated price target from Stifel signals confidence in Semtech’s growth prospects and strategic positioning within its market segments. The firm’s maintenance of a Buy rating suggests that they believe the stock still offers a valuable investment opportunity.

In other recent news, Semtech Corporation has reported a 99.95% network uptime for 2024, attributed to its AI-enhanced mobile network infrastructure. This achievement highlights the company’s focus on security and network performance, utilizing AI tools to prevent unauthorized SIM usage and resolve connectivity issues efficiently. Additionally, Semtech has expanded its revolving credit facility to $455 million, adding $117.5 million in borrowing capacity. This adjustment reflects the company’s strategic financial management and commitment to maintaining a strong balance sheet.

Stifel analysts have adjusted their outlook on Semtech, raising the stock price target to $42 while maintaining a Buy rating. This revision is based on expected quarter-over-quarter revenue growth in the Infrastructure segment and potential upside in the July quarter revenue guidance. Conversely, Stifel previously reduced their price target to $35, highlighting the company’s ability to navigate industry challenges and its strategic focus on the IoT business segment. The analysts believe Semtech’s focus on software and services revenues could enhance its position in low-power connectivity solutions.

These developments underscore Semtech’s ongoing efforts to innovate and expand its market presence amidst dynamic industry conditions.

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