UBS reiterates Buy rating on Semtech stock, maintains $65 price target

Investing.com - UBS has reiterated its Buy rating and $65.00 price target on Semtech Corp. (NASDAQ:SMTC), currently trading at $57.22 with a market capitalization of $4.93 billion, following the company’s latest quarterly results. According to InvestingPro data, the stock has gained over 31% in the past six months.

Semtech reported in-line results and guidance for the quarter, according to UBS analyst Timothy Arcuri, maintaining a healthy gross margin of 52.11%. The firm noted that Semtech’s commentary on AI connectivity suggests its data center opportunity remains intact for calendar year 2026. InvestingPro analysis shows 8 analysts have revised their earnings estimates upward for the upcoming period.

The data center growth is expected to be driven by increasing visibility on customer engagements in both CopperEdge and LPO technologies, which are set to begin ramping up at the end of this year.

UBS observed that while Semtech’s IoT performance improved, management reiterated that divesting from lower-margin business segments remains a top priority. This includes the potential sale of the former Sierra unit as Semtech positions itself as a higher-margin fabless semiconductor firm.

The investment firm left its estimates for Semtech largely unchanged following the quarterly report, maintaining both its $65 price target and Buy rating on the stock. Based on InvestingPro’s Fair Value analysis, the stock appears to be trading above its intrinsic value, suggesting investors should carefully consider their entry points.

In other recent news, Semtech Corporation reported impressive second-quarter fiscal 2026 results, with a 20% year-over-year increase in revenue and a significant rise in adjusted earnings. This performance exceeded expectations and was noted by several analyst firms. Benchmark reiterated its Buy rating and maintained a $68 price target, highlighting the company’s solid performance and modest upside to consensus estimates. Piper Sandler also raised its price target to $65, citing a "beat and raise quarter" and strong performance in Semtech’s FiberEdge business. Similarly, Craig-Hallum increased its price target to $62, emphasizing Semtech’s strong positioning in the AI data center market and future growth potential. Stifel acknowledged the company’s turnaround progress by raising its price target to $57, highlighting improved business execution and operating leverage potential. These developments indicate a positive outlook from analysts for Semtech’s future performance.

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