SMI Deal Boosts SMTC Scale, GM
Analysts at Caris & Company maintain their "average" rating on Semtech Corp (NASDAQ: SMTC), while raising their estimates for the company. The target price for SMTC is set to $18.
Semtech has announced robust results. “Shares added 4.5% aftermarket as investors digested: a) broad-based strength in all product groups ex Power Discrete, b) 120 bps of GM expansion on volume and mix vs a +20 bps mid-pt guide, and c) extra leverage toward the long-term target financial model with the SMI deal. Near term integration risk exists, though the discrete nature of SMI’s product groups should make the deal a nice bolt-on. Overall mgt is slowly improving the business, though it appears these positives are significantly discounted given limited upside to our target and P/E and EV/S valuation multiples which straddle sector avgs,” the analysts say.
Caris & Company has raised its EPS estimate for FY11 from $0.95 to $1.16 to reflect the inclusion of “SMI to cyclical upside in recent results.”
