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Semtech’s disappointing margin outlook driven by lower revenue, says Needham

Needham keeps a Buy rating and $35 price target on Semtech but notes the company’s “well below consensus” Q3 revenue guide. Operating expense cuts were more aggressive than expected and the core Semtech business is intact, but its Sierra Wireless business is set to decline by about 30% sequentially amid deeper inventory correction, the analyst tells investors in a research note. The firm adds however that Semtech management may provide better insight into cost reduction actions that bring the company’s operating margins more in-line with those of its analog and mixed-signal peers.

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