Semtech Receives Price Target Increase of 25% from Baird Analyst

By Don Francis, Editor
April 3, 2024 8:04 AM UTC
Semtech Receives Price Target Increase of 25% from Baird Analyst

Baird's Craig Ellis raised their price target on Semtech (NASDAQ: SMTC) by 25% from $40 to $50 on April 1, 2024. The analyst maintained their Buy rating on the stock.

Ellis' decision to increase the price target followed a meeting with management that took place after the release of Semtech's fourth quarter and fiscal year 2024 earnings report on March 28, 2024. During the meeting, management expressed a "gradually constructive" tone, particularly regarding Signal Integrity, and showed optimism about Sierra Wireless' projected turnaround in the second half of the year.

Ellis believes that Semtech's current valuation is very favorable, considering the potential for revenue and mix growth, as well as ongoing deleveraging efforts.

Semtech's fourth quarter 2024 results revealed a loss per share of $0.06, missing the Zacks Consensus Estimate of $(0.05) and representing a significant decline of 112.8% compared to the same quarter in 2023. However, revenues for the quarter reached $192.95 million, beating the Zacks Consensus Estimate by 0.89% and showing a 15.2% increase over the previous year's fourth quarter.

For the full fiscal year 2024, Semtech reported earnings per share of $0.14, a decrease of 95% from the previous year. However, revenue for the year reached $868.8 million, reflecting a 14.8% increase year-over-year.

Looking ahead to the first quarter of 2025, management provided guidance, projecting an earnings per share range of $(0.04) to $0.04 and revenue between $195 million to $205 million. They also anticipate a gross margin of 49.5%, operating expenses of $77 million to $80 million, and operating income of $17.5 million to $23.5 million.

Semtech's President and CEO, Paul H. Pickle, commented on the company's performance, stating that the demand for their semiconductor business has transitioned from stable to growing. He also expressed confidence in Semtech's ability to benefit from near-term growth trends, particularly in the infrastructure end market.

Executive Vice President and CFO Mark Lin added that working capital improvements contributed to positive operating and free cash flows in the fourth quarter. Lin also highlighted the implementation of a single Enterprise Resource Planning (ERP) system at the beginning of the first quarter of 2025, which is expected to enhance internal controls and increase efficiencies.

In addition to Baird's Craig Ellis, several other analysts updated their ratings and price targets for Semtech on April 1, 2024. Anthony Stoss from Craig-Hallum raised the price target by 20% to $36 and maintained a Buy rating on the stock. Tore Svanberg from Stifel Nicolaus raised the price target by 19.2% to $31 and maintained a Strong Buy rating. Quinn Bolton from Needham raised the price target by 46.2% to $38 and also maintained a Buy rating.

According to available data, 100% of top-rated analysts currently rate Semtech as either a Strong Buy or Buy. No analysts consider it a Hold, and there are no recommendations to sell the stock.

Since the release of Semtech's latest quarterly report on March 28, 2024, the stock price has increased by 2.5%. Over the past year, the stock has risen by 24.7%. However, during this period, Semtech has slightly trailed behind the S&P 500, which has experienced a 26.2% increase.

Baird analyst Craig Ellis is highly regarded in the field, ranking in the top 1% out of 4,530 Wall Street analysts according to WallStreetZen. Ellis specializes in the Healthcare and Industrials sectors, among others, and has an impressive track record with an average return of 27.1% and a 53.8% win rate.

Semtech Corporation is a company that designs, develops, manufactures, and markets analog and mixed-signal semiconductor products and advanced algorithms. Their product portfolio includes signal integrity products used in various infrastructure and industrial applications, integrated circuits for data centers and wireless networks, and specialized radio frequency products used in industrial, medical, and communications applications. Semtech also offers power products that control and regulate power within electronic systems.

Semtech serves original equipment manufacturers and their suppliers in the enterprise computing, communications, and consumer and industrial end-markets. The company operates globally, with headquarters in Camarillo, California.

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