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Semtech Corp. (SMTC)
NASDAQ:SMTC
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Semtech
(NASDAQ:SMTC)
50Neutral
Positive Factors
Customer Engagement
Semtech remains engaged with over 20 potential customers across a broader set of deployments, indicating multiple growth opportunities.
Earnings
Semtech posted sales ahead of its original guidance and street consensus, demonstrating the company's strong performance and financial health.
Product Innovation
Semtech remains at the center of AI-driven, new high-bandwidth connectivity technologies in data centers, driving demand notably for active copper and optical solutions.
Negative Factors
Business Risks
Risks include lack of industry adoption for certain new technologies, transitioning from IC to licensing revenue, customer concentration, supply constraints, and competition.
Market Challenges
PON declined QOQ and was worse than expected, though results here will largely depend on the timing of tender offers in China.
Revenue Concerns
Revenue for the CopperEdge product line should be less than $50MM in FY26 due to architectural rack changes at NVIDIA.
Semtech (SMTC) vs. S&P 500 (SPY)
Market Cap
$3.41B
Dividend YieldN/A
Average Volume (3M)3.66M
Price to Earnings (P/E)―
Beta (1Y)1.84
Revenue Growth4.66%
EPS Growth84.78%
CountryUS
Employees1,917
SectorTechnology
Sector Strength51
IndustrySemiconductors
Share Statistics
EPS (TTM)-2.64
Shares Outstanding86,178,894
10 Day Avg. Volume3,500,021
30 Day Avg. Volume3,664,748
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)3.52
Price to Cash Flow (P/CF)25.40
P/FCF Ratio10.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$58.20Price Target Upside44.27% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering12
Semtech Business Overview & Revenue Model
Company DescriptionSemtech Corporation designs, develops, manufactures, and markets analog and mixed-signal semiconductor products and advanced algorithms. It provides signal integrity products, including a portfolio of optical data communications and video transport products used in various infrastructure, and industrial applications; a portfolio of integrated circuits for data centers, enterprise networks, passive optical networks, wireless base station optical transceivers, and high-speed interface applications; and video products for broadcast applications, as well as video-over-IP technology for professional audio video applications. The company also offers protection products, such as filter and termination devices that are integrated with the transient voltage suppressor devices, which protect electronic systems from voltage spikes; and wireless and sensing products comprising a portfolio of specialized radio frequency products used in various industrial, medical, and communications applications, as well as specialized sensing products used in industrial and consumer applications. In addition, it provides power products consisting of switching voltage regulators, combination switching and linear regulators, smart regulators, isolated switches, and wireless charging that control, alter, regulate, and condition the power within electronic systems. The company serves original equipment manufacturers and their suppliers in the enterprise computing, communications, and consumer and industrial end-markets. It sells its products directly, as well as through independent sales representative firms and independent distributors in North America, Europe, Asia- Pacific, and internationally. The company was incorporated in 1960 and is headquartered in Camarillo, California.
How the Company Makes MoneySemtech makes money primarily through the design, development, and sale of semiconductor products. The company's revenue streams include integrated circuits (ICs) for various applications such as wireless and optical communications, sensing, and power management. Semtech partners with major technology companies and manufacturers to embed its technologies in a wide range of devices and systems. Its earnings are significantly influenced by the demand in sectors like IoT, data communication, and consumer electronics, where Semtech's advanced chipsets and solutions play a crucial role. The company's growth is also supported by strategic acquisitions and its focus on innovation to maintain a competitive edge in the semiconductor industry.
Semtech Financial Statement Overview
Summary
Semtech faces significant financial challenges with declining revenue, negative net income, and a concerning balance sheet with negative equity. Despite some improvement in cash flow, the company's high leverage and financial instability are major concerns.Income Statement
Semtech has faced challenges with declining revenue from annual to TTM data. The gross profit margin for the TTM is approximately 48.96%, showing some efficiency in cost management. However, negative net income results in a net profit margin of -99.08%, reflecting significant losses. The TTM period also shows negative EBIT and EBITDA margins, indicating operational inefficiencies.45
Neutral
Balance Sheet
The company's balance sheet reveals a concerning negative stockholders' equity of -$46.79 million as of TTM, suggesting financial instability. The debt-to-equity ratio is not calculable due to negative equity, but high total liabilities relative to assets point to leverage concerns. There is a diminishing equity ratio, and the negative trend in equity showcases risk potential.30
Negative
Cash Flow
Semtech's cash flow shows improvement in TTM free cash flow, growing from -$125.02 million to $30.33 million. Despite this positive trajectory, the operating cash flow to net income ratio is challenging due to negative net income, indicating ongoing profitability issues. The free cash flow to net income ratio is also affected by these losses.40
Negative
| Breakdown | |||||
| TTM | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 | Mar 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 851.23M | 868.76M | 756.53M | 740.86M | 595.12M | 547.51M | Gross Profit |
| 416.81M | 296.25M | 478.56M | 466.08M | 363.55M | 336.68M | EBIT |
| 33.57M | -944.32M | 92.80M | 145.02M | 74.96M | 52.01M | EBITDA |
| -694.60M | -851.10M | 130.82M | 180.41M | 100.18M | 93.27M | Net Income Common Stockholders |
| -843.40M | -1.09B | 61.38M | 125.66M | 59.90M | 31.87M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 312.12M | 143.13M | 235.51M | 279.60M | 268.89M | 293.32M | Total Assets |
| 1.06B | 1.37B | 2.57B | 1.13B | 1.08B | 1.05B | Total Debt |
| 211.11M | 1.40B | 1.34B | 175.65M | 179.19M | 194.74M | Net Debt |
| -101.01M | 1.27B | 1.10B | -103.95M | -89.70M | -98.58M | Total Liabilities |
| 380.20M | 1.68B | 1.81B | 393.14M | 383.15M | 375.23M | Stockholders Equity |
| 682.68M | -307.43M | 755.85M | 737.58M | 698.74M | 676.27M |
| Cash Flow | Free Cash Flow | ||||
| 30.33M | -125.02M | 98.39M | 176.94M | 86.20M | 95.56M | Operating Cash Flow |
| 38.41M | -93.92M | 126.71M | 203.12M | 118.93M | 118.62M | Investing Cash Flow |
| -516.00K | -22.70M | -1.25B | -40.32M | -42.91M | -34.33M | Financing Cash Flow |
| -25.84M | 10.55M | 1.08B | -152.10M | -100.45M | -103.08M |
Semtech Technical Analysis
Negative
40.34
Price Trends
48.93
Negative
53.30
Negative
45.18
Negative
Market Momentum
-1.66
Negative
50.02
Neutral
80.03
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SMTC, the sentiment is Negative. The current price of 40.34 is above the 20-day moving average (MA) of 36.67, below the 50-day MA of 48.93, and below the 200-day MA of 45.18, indicating a neutral trend. The MACD of -1.66 indicates Negative momentum. The RSI at 50.02 is Neutral, neither overbought nor oversold. The STOCH value of 80.03 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SMTC.
Semtech Risk Analysis
Semtech disclosed 60 risk factors in its most recent earnings report. Semtech reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Semtech Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
68 Neutral | $27.82B | 91.20 | 4.71% | 3.51% | -44.31% | -86.74% | |
67 Neutral | $50.89B | 20.40 | 28.16% | 2.02% | -4.99% | -9.18% | |
67 Neutral | $18.45B | 12.05 | 18.97% | ― | -14.19% | -27.42% | |
65 Neutral | $162.88B | 34.45 | 28.25% | 2.97% | -10.72% | -26.60% | |
64 Neutral | $2.10B | 47.70 | 2.49% | ― | -21.10% | -80.81% | |
58 Neutral | $21.97B | 10.49 | -18.75% | 2.40% | 4.80% | -25.17% | |
50 Neutral | $3.41B | ― | -137.84% | ― | 4.66% | 84.78% |
* Technology Sector Average
Performance Comparison
SMTC
Semtech
40.34
18.07
81.14%
DIOD
Diodes
46.92
-21.06
-30.98%
MCHP
Microchip
53.89
-31.63
-36.99%
NXPI
NXP Semiconductors
211.12
-25.06
-10.61%
ON
ON Semiconductor
45.68
-27.86
-37.88%
TXN
Texas Instruments
185.51
19.31
11.62%
Semtech Earnings Call Summary
Earnings Call Date: Mar 13, 2025 | % Change Since: 23.33% | Next Earnings Date: May 28, 2025
Earnings Call Sentiment Positive
The earnings call presented several positive developments, including strong revenue growth particularly in the data center and LoRa segments, significant improvements in margins, and a substantial reduction in debt. However, challenges such as the CopperEdge deployment delays and expected seasonal declines in the industrial market were noted. Overall, the positive aspects significantly outweigh the lowlights, indicating a strong performance and optimistic outlook.Highlights
Strong Revenue Growth
Net sales for Q4 were $251 million, up 6% sequentially and up 21% year over year. Data center net sales were a record $50 million, up 16% sequentially and up 183% year over year.
Improving Margins
Adjusted gross margin improved 200 basis points year over year to 53.2% in Q4. Adjusted operating margin improved 570 basis points to 19.9%, and adjusted EBITDA margin improved 610 basis points to 23% for FY 2025.
Significant Debt Reduction
Net debt was reduced by $868 million or 68% from the end of FY 2024, enabling annual cash savings of approximately $40 million based on interest rates.
LoRa Segment Growth
Within the industrial end market, LoRa-enabled solutions recorded Q4 net sales of $37.1 million, up 28% sequentially and up 205% year over year.
Recognition and Innovation
AirVantage Smart Sensing was recognized with the M2M Innovation of the Year Award by IoT breakthrough. Semtech also achieved the 5G Redcap certification in collaboration with AT&T and Qualcomm.
Lowlights
CopperEdge Deployment Delays
Expected volume ramp for CopperEdge products will not materialize for FY 2026 due to rack architecture changes. CopperEdge demand at anchor customers to be lower than prior expectations for three to four quarters.
Seasonal Decline in Industrial Market
The industrial end market is expected to be down in Q1 FY 2026 reflective of seasonality in the IoT portfolio.
Company Guidance
In the Semtech Corporation's fourth-quarter and fiscal year 2025 earnings call, the company provided guidance indicating positive momentum across various financial metrics. For FY 2025, Semtech reported sequential growth in net sales, gross margin, operating margin, and earnings per share each quarter. The adjusted gross margin improved by 200 basis points, adjusted operating margin by 570 basis points, adjusted EBITDA margin by 610 basis points, and adjusted diluted earnings per share increased by 529%. In Q4, net sales reached $251 million, up 6% sequentially, with data center net sales hitting a record $50 million, up 16% sequentially and 183% year-over-year. The adjusted operating margin for Q4 was 19.9%, and adjusted EBITDA margin was 23%. For the first quarter of FY 2026, Semtech expects net sales of $250 million, adjusted gross margin of 53%, and adjusted diluted earnings per share of 37 cents. The company aims to focus on strategic investments, portfolio optimization, and driving margin expansion moving forward.Semtech Corporate Events
Business Operations and StrategyFinancial Disclosures
Semtech Reports Strong Q4 and Fiscal Year 2025 Results
Positive
Mar 13, 2025
Semtech Corporation reported its financial results for the fourth quarter and fiscal year 2025, ending January 26, 2025, showing a positive trajectory with net sales of $251 million for the quarter, a 6% sequential increase, and $909.3 million for the fiscal year, a 5% increase from the previous year. The company achieved improvements in gross margin, operating margin, and earnings per share, and reduced its net debt by 68% year-over-year, positioning itself for long-term growth through strategic investments and portfolio optimization.
Executive/Board ChangesBusiness Operations and Strategy
Semtech Announces Executive Team Change with Russell’s Departure
Neutral
Feb 24, 2025
On February 20, 2025, Semtech Corporation announced a Separation and General Release Agreement with Mark P. Russell, the Senior Vice President of Global Sales and Marketing, whose last day will be March 6, 2025. The agreement includes a severance package with a lump sum payment and a bonus for fiscal year 2025, indicating a strategic change in the company’s executive team that could impact its sales and marketing operations.
Product-Related AnnouncementsFinancial Disclosures
Semtech Revises Sales Expectations for CopperEdge Products
Negative
Feb 7, 2025
Semtech Corporation has revised its net sales expectations for fiscal year 2026 concerning its CopperEdgeTM products, which are used in active copper cables. These sales are now expected to fall below the previously projected floor case estimate of $50 million due to changes in server rack architecture, with no anticipated increase throughout the fiscal year. Despite this, the CopperEdge portfolio is projected to be integrated into future server rack designs, indicating ongoing collaboration with customers and end users.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.