Oppenheimer Stays Sidelined On Semtech, But Sees Company Making The Right Moves

Semtech Corporation SMTC reported its FQ2 sales and EPS ahead of the consensus, while issuing its FQ3 guidance in line.

Oppenheimer’s Rick Schafer maintained a Perform rating on the company.

Results & Guidance

The company reported sales of $126 million and EPS of $0.35 million, marginally ahead of the consensus forecasts. However, the FQ3 sales and EPS guidance of $138 million and $0.36, respectively, was in line with the consensus expectations.

The consumer and industrial segments witnessed robust growth during the quarter, rising 20 percent quarter-on-quarter, although PON and Basestation remained weak, despite driving upside during the previous quarter.

However, management expects PON and Basestation to recover towards the end of Q3, which mutes any near term upside.

Analyst On Sidelines

Schafer believes that “SMTC is laying the groundwork to achieve its $1B 2021 organic revenue target. That said, it appears greenfield LoRa, 100G, and Wireless Charging will take a few years to contribute more meaningfully to its 15 percent top-line CAGR target.”

The analyst therefore prefers to remain on the sidelines.

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