On Thursday, Semtech Corp . (NASDAQ:SMTC (NASDAQ:SMTX)) shares saw its price target increased by Needham from $38.00 to $50.00, with a sustained Buy rating.
The firm acknowledged Semtech's robust earnings performance and raised revenue forecasts, while reiterating its FY26 Adjustable Cyclic Control (ACC) Total Addressable Market (TAM) opportunity at $100 million.
Semtech's recent financial results surpassed expectations, prompting upward revisions in revenue projections, particularly for its Data Center operations.
The company's Data Center segment is experiencing upward revisions, similar to trends seen in other semiconductor firms this earnings season.
On the other hand, forecasts for other segments, primarily those involving Sierra Wireless (NASDAQ:SWIR) assets, have been adjusted downward due to a slower than anticipated recovery.
Needham highlights the positive outlook on ACC's visibility, which has led to the inclusion of an additional $50 million in the FY26 revenue estimates for Semtech.
Investors appear to be patient with the slower rebound of Semtech's cellular modular and telecom-related businesses, as the company's Data Center offerings continue to demonstrate robust performance. This sentiment is reflected in Needham's updated FY25 revenue estimate, which has been slightly increased.
The FY26 revenue projections have seen a more significant boost, factoring in the additional ACC revenue, which is expected to be accretive to gross margins.
The revised price target of $50 is based on approximately 30 times Needham's CY25 Non-GAAP (NG) Earnings Per Share (EPS) estimate of $1.70. This adjustment reflects a positive outlook on Semtech's financial prospects and market opportunities in the coming years.
In other recent news, Semtech Corporation reported impressive Q1 2025 financial results, with earnings per share (EPS) and revenue surpassing analysts' expectations.
Semtech's Q1 EPS was $0.06, exceeding the estimated $0.02, and revenue reached $206.1 million, outperforming the anticipated $195.28 million. This performance led Roth/MKM to increase Semtech's price target from $42 to $50, maintaining a Buy rating on the stock.
The firm's decision followed Semtech's sales surpassing the upper limit of the company's guidance, marking a sequential increase of 7%, primarily due to strong performance in the Data Center, PON, and LoRa sectors.
Despite weakness in the wireless segment, Semtech's forecast for the upcoming quarter reflects a positive trend, with a 3% sequential rise in outlook. Analysts at Roth/MKM also highlighted the anticipated enhancement of profitability as a key driver for the raised price target.
For the upcoming Q2 of fiscal year 2025, Semtech projected an EPS of $0.09 and revenue forecast of $212 million, indicating a positive outlook. These are some of the recent developments at Semtech Corporation.
InvestingPro Insights
Following the upbeat assessment by Needham, real-time data from InvestingPro further complements the financial picture of Semtech Corp. (NASDAQ:SMTC). With a market capitalization of $2.5 billion, the company's financial health is underscored by a robust revenue growth of 14.83% over the last twelve months as of Q4 2023. This is bolstered by a gross profit margin of 48.65%, reflecting the company's ability to maintain profitability in its operations.
InvestingPro Tips highlight the positive momentum Semtech has experienced, with a striking 131.62% price total return over the last six months and a 75.1% return over the last year. Analysts have taken note of these trends, revising their earnings upwards for the upcoming period, signaling confidence in the company's trajectory. Furthermore, with liquid assets surpassing short-term obligations, Semtech exhibits a strong balance sheet, which is a reassuring sign for investors.
For those interested in a deeper dive into Semtech's financials and future prospects, InvestingPro offers additional insights and analytics. Readers can benefit from an exclusive offer using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With several more InvestingPro Tips available, including predictions of profitability this year, these insights could prove invaluable in making informed investment decisions.
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