Semtech Slides Despite Record Q1 Sales: 4 Analysts Maintain Ratings

Shares of Semtech Corp SMTC were down 5.8% at last check on Wednesday, despite the company’s upbeat first-quarter results.

Here are some key analyst takeaways.

• Stifel analyst Tore Svanberg reiterated a Buy rating, while raising the price target from $42 to $45.
• Piper Sandler analyst Harsh Kumar maintained an Overweight rating and price target of $55.
• Roth Capital Partners analyst Scott Searle reaffirmed a Buy rating and price target of $65.
• Cantor Fitzgerald analyst Quinn Bolton maintained a Buy rating and price target of $54.

Check out other analyst stock ratings.

Stifel: Growth momentum continued at Semtech's Infrastructure segment, with sales growing by 5% sequentially and 30% year-on-year to $72.8 million, Svanberg said in a note. The company reported "yet another record in Data Center (DC) sales," which grew by 3% sequentially and 143% year-on-year to at $51.6 million, he added.

Semtech's profitability improved. Non-GAAP operating margins are projected to expand from 16.4% in fiscal 2025 to 18.9% in fiscal 2026 and 20.2% in fiscal 2027. "Notably, SMTC continues to pay down debt with its FCF generation," the analyst stated.

Piper Sandler: Semtech reported strong quarterly results, with revenues of $251.1 million and earnings of 38 cents per share beating consensus of $250.1 million and 37 cents per share, respectively, Kumar said. The company's gross margins, at 53.5%, came in slightly higher than the 53.0% projection, he added.

Management guided to earnings of 40 cents per share on revenues of $256 million at the midpoint. That’s slightly above expectations 39 cents per share and $255.5 million. "During the July quarter, SMTC expects sequential growth from its infrastructure (including data center) and consumer segments to be offset slightly by industrial which is forecasted flat to slightly down due to a moderation in LoRa sales," the analyst stated.

Roth Capital Partners: Semtech reported record sales of $251.1 million, up 22% year-on-year, Searle said. Data Center sales climbed 143% year-on-year, he added.  

The favorable mix lent upside to gross margins, the analyst stated. Sales of $256 million are “sequentially flattish," he further wrote.

Cantor Fitzgerald: Semtech issued healthy guidance, "driven by data center related infrastructure shipments and LoRa-enabled solutions," Bolton said. Data Center momentum is expected to continue into the fiscal second quarter.

The company's guidance reflects revenue growth of 2.0% sequentially and 18.9% year-on-year, the analyst stated. "Non-GAAP gross margin is expected to be 53.0% at the midpoint, in line with our estimate and below the Street’s 53.2% estimate," he further wrote.

Price Action: Shares of Semtech had declined by 6.11% to $36.41 at the time of publication on Wednesday.

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