Semtech (SMTC) stock surged over 21% after reporting solid Q4 earnings, driven by strong sales across key segments and a drop in debt. Following the results, analyst Scott Searle of Roth MKM reaffirmed his Buy rating with a $65 price target, calling the stock’s current levels a compelling entry point due to its “deeply discounted valuation.”
Semtech Corp. is a semiconductor company that specializes in high-performance analog and mixed-signal chips for data centers, IoT, and wireless communications.
Roth MKM’s Take on SMTC Stock
Roth MKM pointed to Semtech’s strong Q4 performance, with revenues climbing 30% year-over-year and gross margins improving to 53.2%. The company also generated $30.9 million in free cash flow, helping to cut net debt down to about $400 million. The analyst expects debt levels to drop even more, especially if Semtech moves forward with a well-priced divestment of Sierra Wireless.
Despite some early concerns over a “rack architectural shift,” the firm notes that active copper cable (ACC) design activity remains strong, with over 20 ongoing engagements, including Nvidia’s (NVDA) next-gen solutions. With ACC worries easing, Roth MKM believes Semtech’s discount compared to data center peers makes it an attractive buy and reaffirmed its Buy rating on the stock.
How Other Analysts Are Reacting
Wall Street analysts are largely bullish on Semtech following its earnings report. Stifel Nicolaus reduced its price target to $54 while maintaining a Buy rating, seeing a solid risk-reward opportunity at current levels. Similarly, UBS lowered its price target to $60 but reiterated a Buy stance, suggesting a potential upside of about 51% from current levels.
On TipRanks, the consensus among 12 Wall Street analysts is a “Strong Buy” rating, with an average SMTC stock 12-month price target of $58.82, reflecting a 48.54% potential upside.
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