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Semtech Corp. (SMTC)
NASDAQ:SMTC
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Semtech
(NASDAQ:SMTC)
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Rating:69Neutral
Price Target:
$98.00
▲(33.15% Upside)
Action:DowngradedDate:12/09/25
Semtech's overall stock score reflects strong technical indicators and positive earnings call highlights, which are offset by high valuation concerns and mixed financial performance. The company's strategic advancements and growth in key segments are promising, but profitability and valuation remain areas of concern.
Positive Factors
LoRa ecosystem adoption
Sustained double-digit YoY growth in LoRa revenue reflects durable product-market fit and ecosystem momentum. As device makers and network operators continue integrating LoRaWAN, recurring design wins and network effects can drive multi-quarter shipments and steady revenue streams for the connectivity franchise.
Data center product expansion
Strong YoY Data Center growth plus targeted TIA, driver building blocks and LPO initiatives position the company in AI and high-speed optics markets. These high-growth, higher-value product lines diversify revenue mix and create durable structural exposure to secular AI/data-center demand.
Improved capital structure & cash generation
Major interest expense reduction materially improves recurring profitability and lowers financial risk. Combined with positive FCF growth and strong FCF-to-net-income conversion, the company has strengthened cash generation capacity to fund R&D, M&A, and operational resilience over the medium term.
Negative Factors
Low net profitability
A sub-3% net margin limits retained earnings and reduces buffers against demand swings. Persistent low profitability constrains reinvestment, shareholder returns and the ability to scale SG&A or R&D without pressuring margins, weakening long-term capital allocation flexibility.
IoT systems margin erosion
A structural mix shift to lower-margin cellular modules drags gross margins and undermines the high-margin connectivity thesis. If product mix stays skewed toward commoditized modules, it will be difficult to sustain consolidated margins despite growth in other segments.
Divestiture uncertainty & legacy leverage
Uncertain divestiture timing delays margin normalization and strategic focus. Moderate leverage and low ROE signal limited capital efficiency; until noncore assets are exited and returns improve, balance sheet and resource allocation remain potential long-term constraints.
Semtech (SMTC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$6.81B
Dividend YieldN/A
Average Volume (3M)1.86M
Price to Earnings (P/E)―
Beta (1Y)2.10
Revenue Growth20.60%
EPS GrowthN/A
CountryUS
Employees1,838
SectorTechnology
Sector Strength88
IndustrySemiconductors
Share Statistics
EPS (TTM)0.44
Shares Outstanding92,540,054
10 Day Avg. Volume2,895,467
30 Day Avg. Volume1,858,015
Financial Highlights & Ratios
PEG Ratio0.34
Price to Book (P/B)8.84
Price to Sales (P/S)5.27
P/FCF Ratio109.51
Enterprise Value/Market Cap1.04
Enterprise Value/Revenue6.92
Enterprise Value/Gross Profit13.32
Enterprise Value/Ebitda41.12
Forecast
1Y Price Target
$104.62Price Target Upside42.15% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering13
EPS Forecast (FY)2.18
Revenue Forecast (FY)$1.19B
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 generates revenue primarily through the sale of its semiconductor products, which are used in various applications across multiple industries. Key revenue streams include the sale of integrated circuits for IoT devices, wireless communication systems, and infrastructure solutions. The company also benefits from licensing its LoRa technology to partners, which facilitates the deployment of IoT networks. Significant partnerships with companies in telecommunications, industrial automation, and smart city initiatives further enhance Semtech's revenue potential, as they create demand for its products and expand its market reach.
Semtech Earnings Call Summary
Earnings Call Date:Mar 16, 2026
(Q4-2026)
| % Change Since: |
Next Earnings Date:Jun 03, 2026
Earnings Call Sentiment Positive
The call conveyed strong financial and operational momentum: record annual revenue ($1.05B), robust Q4 growth, large EPS improvement (FY +94%), improved margins and cash generation, and strategic progress through the HIFU acquisition and multiple data-center design wins (ACC, LPO, NPO). Near-term headwinds include HIFU capacity constraints, incremental ramp costs pressuring Semiconductor gross margin in Q1, higher OpEx and an increased tax rate, and some end-market variability (consumer sequential decline and IoT Systems lumpiness). On balance the positives — particularly data center revenue acceleration, cash flow strength, margin expansion, and accretive acquisition strategy — materially outweigh the near-term risks.Q4-2026 Updates
Positive Updates
Record Annual Revenue
Fiscal 2026 net sales reached a record $1,050,000,000, representing annual growth of 15% year over year.
Quarterly Revenue and Sequential Momentum
Q4 net sales were $274,400,000, up 3% sequentially and up 9% year over year; this marked the eighth consecutive quarter of net sales growth.
Strong Earnings and EPS Improvement
Adjusted diluted EPS for the full year was $1.71, an increase of 94% year over year; Q4 adjusted diluted EPS was $0.44, up 10% year over year and above the midpoint of guidance.
Robust Gross Margin Performance
Adjusted gross margin was 51.6% (above the midpoint of outlook). Total Semiconductor Products gross margin was 61.7%, up 40 basis points sequentially and up 350 basis points year over year.
Record Data Center Revenue and Rapid Growth
Fiscal 2026 data center revenues were a record $223,000,000, up 58% year over year; Q4 data center revenues were $63,000,000, up 12% sequentially and 26% year over year. Management expects data center revenue to grow >50% year over year in the coming fiscal year.
Strong Cash Generation and Improved Capital Structure
Q4 operating cash flow was $61,500,000 (up 30% sequentially and 84% year over year). Q4 free cash flow was $59,100,000 (up 32% sequentially and 91% year over year). Cash and equivalents were $195,200,000; adjusted net leverage improved to 1.3 from 1.5 sequentially and 2.3 year over year.
Strategic Acquisition of HIFU
Acquired HIFU (indium phosphide laser and gain-chip manufacturer) to vertically integrate lasers with Semtech TIAs and drivers; expected to be accretive to non-GAAP diluted EPS within the first year and increase potential content per 3.2T module to roughly $80.
Product and Ecosystem Wins — ACC, LPO, NPO
Design wins and ecosystem participation: CopperEdge ACC shipments initiating this quarter with ramp expected mid-year; LPO design wins and membership in XPO MSA; Semtech co-authored ACC MSA and is developing NPO — all supporting multi-year data center content growth.
LoRa Momentum and Long-Term Outlook
Full-year LoRa revenues were $156,000,000, up 34% year over year; Q4 LoRa net sales were $39,600,000 (up 7% year over year). Management expects long-term LoRa growth of ~20% and quarterly LoRa sales in the $35M–$45M range.
Improved Interest and Financing Expense
Semtech was a net interest income position in Q4 ($100,000) versus $11.2M net interest expense a year ago. Fiscal year adjusted net interest expense fell to $11.5M from $70.6M in fiscal 2025.
Positive Near-Term Guidance
Q1 FY2027 guidance: net sales $283,000,000 +/- $5,000,000 (up ~13% year over year at midpoint); expected adjusted diluted EPS $0.45 +/- $0.03; expected adjusted gross margin ~52.8%.
Product Introductions and Market Demonstrations
Ongoing product demos (OFC) across copper and optical (1.6T ACCs, 448G per-channel CopperEdge and TIA/modulator drivers, HIFU lasers), and new industrial 5G RedCap routers launched (AirLink RX-400, EX-400).
Negative Updates
Capacity Constraints and Supply Risk for HIFU Products
HIFU products (gain chips and CW lasers) are capacity constrained today; management expects to add capacity but indicated industry-wide demand for epi/fab equipment is high and lead times could affect ramp timing.
Near-Term Gross Margin Pressure from HIFU Ramp
Guidance expects Total Semiconductor Products gross margin of 60.4% in Q1, down ~130 basis points sequentially due in part to initial ramp costs from the HIFU acquisition.
Rising Operating Expenses and R&D Investment
Adjusted net operating expenses are expected to increase to ~$96.9M in Q1 (driven by added R&D costs from the force sensing business and HIFU integration), indicating higher near-term OpEx to support growth initiatives.
Higher Expected Tax Rate
Management expects an adjusted normalized tax rate of 27% for fiscal 2027, up from 15% in fiscal 2026, due to a geographic shift in pretax profits — a headwind to reported EPS vs. prior year.
Consumer Segment Sequential Weakness
High-end consumer net sales in Q4 were $36,600,000, down 13% sequentially (though up 3% year over year), reflecting some near-term volatility in the consumer end market.
IoT Systems & Connectivity Near-Term Headwinds
IoT Systems & Connectivity Q4 net sales were $89,900,000, down 3% year over year (up 2% sequentially), with IoT Systems variability and some project-based lumpiness noted.
Divestiture Not Yet Closed
Management continues to progress the divestiture of the cellular module business; interest appears strong and due diligence is underway, but the transaction is not finalized (timing remains uncertain).
Execution Risks Around Multiple Ramps
Company is supporting multiple concurrent ramps (CopperEdge ACC, 1.6T FiberEdge, HIFU integration, LoRa+ rollouts). While management is confident, simultaneous ramps increase operational complexity and execution risk.
Company Guidance
For Q1 of fiscal 2027 Semtech guided net sales of $283.0M ± $5.0M (up ~13% year‑over‑year at the midpoint), with data center revenue expected to grow ~12% sequentially; infrastructure up sequentially, high‑end consumer sales up ~9% sequentially (~13% YoY) and industrial roughly flat. They forecast adjusted gross margin of 52.8% ± 50 bps (Total Semiconductor Products margin 60.4% ± 50 bps, down ~130 bps sequentially including initial HIFU ramp costs), adjusted net operating expenses of $96.9M ± $1.0M (implying an adjusted operating margin ~18.6% at the midpoint), adjusted EBITDA of $59.5M ± $3.0M (≈21% EBITDA margin), adjusted interest & other expense, net of ~$0.5M, an adjusted normalized tax rate of 27% for FY2027 (vs. 15% in FY2026), and adjusted diluted EPS of $0.45 ± $0.03 based on ~96.6M weighted average shares; management also reiterated that HIFU is expected to be accretive to non‑GAAP EPS within the first year and that data center revenue is expected to grow >50% year‑over‑year for the fiscal year.Semtech Financial Statement Overview
Summary
Semtech's financial performance is mixed. While there is modest revenue growth and improved cash flow, profitability remains a challenge with low net profit margins and fluctuating net income. The balance sheet shows manageable leverage but limited returns for shareholders.Income Statement
Semtech's income statement shows a mixed performance. The TTM data indicates a modest revenue growth rate of 3.03%, with a gross profit margin of 51.87%. However, the net profit margin is relatively low at 2.39%, suggesting limited profitability. The EBIT and EBITDA margins are also modest, indicating room for improvement in operational efficiency. Historical data shows fluctuating net income, with significant losses in previous years, impacting overall profitability.65
Positive
Balance Sheet
The balance sheet reflects a moderate financial position. The TTM debt-to-equity ratio is 0.74, indicating a manageable level of leverage compared to previous years. However, the return on equity is low at 4.10%, suggesting limited returns for shareholders. The equity ratio is not directly provided, but the overall asset base appears stable. Historical data shows improvement in equity levels, but past high leverage remains a concern.60
Neutral
Cash Flow
Cash flow analysis reveals a positive trajectory. The TTM free cash flow growth rate is 7.30%, indicating improved cash generation. The operating cash flow to net income ratio is 0.53, suggesting decent cash conversion efficiency. The free cash flow to net income ratio is high at 0.98, reflecting strong cash flow relative to net income. Historical data shows fluctuations, but recent improvements are promising.70
Positive
| Breakdown | TTM | Jan 2025 | Jan 2024 | Jan 2023 | Jan 2022 | Jan 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.03B | 909.29M | 868.76M | 756.53M | 740.86M | 595.12M |
| Gross Profit | 533.62M | 455.64M | 373.99M | 478.96M | 461.14M | 355.28M |
| EBITDA | 172.81M | 111.05M | 50.34M | 195.88M | 177.58M | 106.55M |
| Net Income | 28.52M | -161.90M | -1.09B | 61.38M | 125.66M | 59.90M |
Balance Sheet | ||||||
| Total Assets | 1.41B | 1.42B | 1.37B | 2.57B | 1.13B | 1.08B |
| Cash, Cash Equivalents and Short-Term Investments | 164.70M | 164.46M | 143.13M | 235.51M | 279.60M | 268.89M |
| Total Debt | 534.65M | 551.50M | 1.40B | 1.34B | 175.65M | 179.19M |
| Total Liabilities | 840.22M | 876.84M | 1.68B | 1.81B | 393.14M | 383.15M |
| Stockholders Equity | 565.66M | 542.43M | -307.43M | 755.85M | 737.58M | 698.74M |
Cash Flow | ||||||
| Free Cash Flow | 142.80M | 43.78M | -125.02M | 98.39M | 176.94M | 86.20M |
| Operating Cash Flow | 153.18M | 57.99M | -93.92M | 126.71M | 203.12M | 118.93M |
| Investing Cash Flow | -22.06M | -11.89M | -22.70M | -1.25B | -40.32M | -42.91M |
| Financing Cash Flow | -103.71M | -21.66M | 10.55M | 1.08B | -152.10M | -100.45M |
Semtech Technical Analysis
Negative
73.60
Price Trends
83.70
Negative
77.86
Negative
66.27
Positive
Market Momentum
-2.13
Positive
38.63
Neutral
19.10
Positive
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 73.6 is below the 20-day moving average (MA) of 85.78, below the 50-day MA of 83.70, and above the 200-day MA of 66.27, indicating a neutral trend. The MACD of -2.13 indicates Positive momentum. The RSI at 38.63 is Neutral, neither overbought nor oversold. The STOCH value of 19.10 is Positive, 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
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
83 Outperform | $6.94B | 10.99 | 20.13% | ― | 2.19% | 19.22% | |
79 Outperform | $9.95B | 59.58 | 6.85% | ― | 6.38% | -4.15% | |
72 Outperform | $8.56B | -205.54 | -4.23% | ― | 59.04% | 28.50% | |
69 Neutral | $6.81B | -174.50 | -6.93% | ― | 20.60% | ― | |
66 Neutral | $5.55B | 149.88 | -1.40% | ― | -7.23% | -15.69% | |
65 Neutral | $6.80B | -66.51 | -6.05% | ― | 47.10% | 64.29% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
SMTC
Semtech
73.60
33.26
82.45%
CRUS
Cirrus Logic
136.07
33.49
32.65%
ONTO
Onto Innovation
200.17
59.25
42.05%
SLAB
Silicon Laboratories
206.25
80.96
64.62%
SITM
SiTime Corporation
325.32
137.03
72.78%
ALGM
Allegro MicroSystems
29.95
2.76
10.15%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.