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Semtech Corp. (SMTC)
NASDAQ:SMTC
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Semtech
(NASDAQ:SMTC)
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Rating:65Neutral
Price Target:
$65.00
▲(3.92% Upside)
Semtech's overall stock score is driven by strong cash flow generation and positive earnings call highlights, including growth in key segments and significant debt reduction. However, the high P/E ratio suggests overvaluation, and technical indicators warn of potential overbought conditions. Profitability and operational efficiency remain areas for improvement.
Positive Factors
Revenue Growth
Consistent revenue growth over multiple quarters indicates strong market demand and effective sales strategies, reinforcing the company's competitive position.
Debt Reduction
Significant debt reduction enhances financial flexibility and reduces risk, allowing for more strategic investments and stability in future operations.
Data Center Segment Growth
Strong growth in the data center segment highlights the company's ability to capitalize on high-demand markets, supporting long-term revenue expansion.
Negative Factors
Negative Net Income
Negative net income indicates profitability challenges, which can hinder reinvestment in growth opportunities and affect long-term financial health.
High Leverage
High leverage increases financial risk, potentially limiting the company's ability to respond to market changes and invest in growth initiatives.
Goodwill Impairment Charge
The goodwill impairment charge reflects underperformance in certain business areas, which may indicate challenges in achieving expected growth and profitability.
Semtech (SMTC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$5.43B
Dividend YieldN/A
Average Volume (3M)1.87M
Price to Earnings (P/E)265.3
Beta (1Y)1.98
Revenue Growth22.22%
EPS GrowthN/A
CountryUS
Employees1,838
SectorTechnology
Sector Strength88
IndustrySemiconductors
Share Statistics
EPS (TTM)0.41
Shares Outstanding86,773,990
10 Day Avg. Volume1,457,263
30 Day Avg. Volume1,874,920
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap0.91
Enterprise Value/Revenue4.98
Enterprise Value/Gross Profit9.61
Enterprise Value/Ebitda63.34
Forecast
1Y Price Target
$63.62Price Target Upside1.71% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering14
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 and solutions, which are used in various applications across multiple sectors. The company has several key revenue streams, including the sale of LoRa devices and wireless radio frequency products, data center products, and various protection devices. Additionally, Semtech benefits from licensing its LoRa technology to third parties, creating an additional revenue stream through licensing agreements. Strategic partnerships with industry leaders in IoT and telecommunications also contribute significantly to its earnings, as these collaborations enable Semtech to expand its market reach and enhance the adoption of its technologies in various applications.
Semtech Earnings Call Summary
Earnings Call Date:Aug 25, 2025
(Q2-2026)
| % Change Since: |
Next Earnings Date:Nov 26, 2025
Earnings Call Sentiment Positive
The earnings call reflected strong financial results and growth in key segments, particularly in data center and high-end consumer markets. However, challenges such as the goodwill impairment charge and cautious bookings in China present areas of concern. Overall, the positive highlights outweigh the lowlights, suggesting a strong performance with optimistic future prospects.Q2-2026 Updates
Positive Updates
Record Net Sales and Financial Performance
Semtech reported record net sales of $257.6 million for Q2 FY2026, a 20% increase year-over-year, marking the sixth consecutive quarter of growth. Adjusted gross margin improved by 280 basis points year-over-year.
Strong Data Center Segment Growth
Data center net sales reached a record $52.2 million, up 92% year-over-year. The segment benefited from record revenues in FiberEdge products, contributing to growth in the infrastructure end market.
Debt Reduction and Financial Strength
Semtech reduced its debt by $879 million year-over-year, resulting in a quarterly interest expense reduction of 80% and an improved net leverage ratio of 1.6x, compared to 8.8x a year ago.
High-End Consumer Market Performance
Net sales for high-end consumer products were $41.2 million, up 16% sequentially and 11% year-over-year, driven by strong content gains and market share growth.
Progress in PerSe and LoRa Technologies
PerSe sensing technology and LoRa-enabled solutions showed significant growth. LoRa net sales were up 29% year-over-year, with a historic record in end node shipments, while PerSe technology continues to gain traction in smart glasses and smartphones.
Negative Updates
Goodwill Impairment Charge
Semtech recorded a non-cash $41.9 million goodwill impairment charge for its connected services business due to underperformance against internal earnings forecasts.
Supply Constraints in China
Bookings from China-based CSPs were cautious due to limits on GPU availability, impacting data center bookings initially in Q2.
CopperEdge Product Mix Impact
The product mix within Signal Integrity was impacted by higher sales of telecommunications products and a decline in CopperEdge revenue.
Company Guidance
In the recent earnings call, Semtech Corporation provided guidance on several key metrics for its fiscal Q3 2026. The company forecasts net sales of approximately $266 million, representing a 12% year-over-year increase at the midpoint. Adjusted gross margin is expected to be around 53.0%, an improvement of 60 basis points compared to the same period last year. Semtech anticipates adjusted operating expenses to be about $88.8 million, resulting in an adjusted operating margin of 19.6%, up by 130 basis points year-over-year. The adjusted EBITDA is projected to be approximately $60 million, with an adjusted EBITDA margin of 22.5%, reflecting a 90 basis point improvement from the previous year. The adjusted net interest expense is estimated at $5 million, benefiting from lower leverage-based pricing on the company's term loan. These figures contribute to an anticipated adjusted diluted earnings per share of $0.44, based on a weighted average share count of 91.6 million shares.Semtech Financial Statement Overview
Summary
Semtech demonstrates a stable but not exceptional financial performance. The company shows strength in cash flow generation, which is crucial for sustaining operations and growth. However, profitability and operational efficiency need improvement to enhance overall financial health. The balance sheet is moderately leveraged, providing some stability but also indicating room for improvement in equity returns.Income Statement
Semtech's income statement shows a mixed performance. The TTM gross profit margin is healthy at 51.87%, indicating efficient production. However, the net profit margin is low at 2.39%, suggesting limited profitability. Revenue growth is modest at 4.43%, showing some positive momentum. The EBIT and EBITDA margins are relatively low, reflecting challenges in operational efficiency.65
Positive
Balance Sheet
The balance sheet reveals a moderate financial position. The debt-to-equity ratio is 0.94, indicating a balanced leverage. Return on equity is low at 6.24%, suggesting limited returns for shareholders. The equity ratio is not directly provided, but the overall asset management appears stable.58
Neutral
Cash Flow
Cash flow analysis is strong, with a significant free cash flow growth of 68.57%, indicating robust cash generation. The operating cash flow to net income ratio is 0.56, showing moderate cash conversion efficiency. Free cash flow to net income is high at 98.37%, reflecting effective cash management.72
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 996.47M | 909.29M | 868.76M | 756.53M | 740.86M | 595.12M |
| Gross Profit | 516.86M | 456.53M | 296.25M | 478.56M | 466.08M | 363.55M |
| EBITDA | 78.41M | 115.07M | -851.10M | 130.82M | 180.41M | 100.18M |
| Net Income | 23.80M | -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 | 168.56M | 164.46M | 143.13M | 235.51M | 279.60M | 268.89M |
| Total Debt | 518.94M | 551.50M | 1.40B | 1.34B | 175.65M | 179.19M |
| Total Liabilities | 852.99M | 876.84M | 1.68B | 1.81B | 393.14M | 383.15M |
| Stockholders Equity | 552.89M | 542.43M | -307.43M | 755.85M | 737.58M | 698.74M |
Cash Flow | ||||||
| Free Cash Flow | 133.09M | 43.78M | -125.02M | 98.39M | 176.94M | 86.20M |
| Operating Cash Flow | 135.29M | 57.99M | -93.92M | 126.71M | 203.12M | 118.93M |
| Investing Cash Flow | -19.42M | -11.89M | -22.70M | -1.25B | -40.32M | -42.91M |
| Financing Cash Flow | -64.13M | -21.66M | 10.55M | 1.08B | -152.10M | -100.45M |
Semtech Technical Analysis
Positive
62.55
Price Trends
53.49
Positive
46.06
Positive
47.81
Positive
Market Momentum
2.89
Negative
68.00
Neutral
78.59
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SMTC, the sentiment is Positive. The current price of 62.55 is above the 20-day moving average (MA) of 57.53, above the 50-day MA of 53.49, and above the 200-day MA of 47.81, indicating a bullish trend. The MACD of 2.89 indicates Negative momentum. The RSI at 68.00 is Neutral, neither overbought nor oversold. The STOCH value of 78.59 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | 4.19B | 32.36 | 21.58% | 1.52% | 27.88% | 37.85% | |
65 Neutral | $5.43B | 265.27 | 11.57% | ― | 22.22% | ― | |
64 Neutral | 2.73B | -57.99 | -3.43% | ― | 11.98% | -138.59% | |
61 Neutral | 7.26B | -80.07 | -13.38% | ― | 65.12% | 15.46% | |
58 Neutral | 4.41B | -41.74 | -17.69% | ― | 29.66% | 47.97% | |
55 Neutral | 2.52B | 76.19 | 0.00% | 1.87% | 7.16% | -21.24% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
Performance Comparison
SMTC
Semtech
62.55
18.52
42.06%
CRUS
Cirrus Logic
118.74
-4.10
-3.34%
ONTO
Onto Innovation
120.58
-67.19
-35.78%
SLAB
Silicon Laboratories
134.51
23.72
21.41%
SITM
SiTime Corporation
288.60
131.73
83.97%
ALGM
Allegro MicroSystems
30.13
6.95
29.98%
Semtech Corporate Events
Business Operations and StrategyFinancial Disclosures
Semtech Reports Record Q2 2026 Financial Results
Positive
Aug 25, 2025
On August 25, 2025, Semtech Corporation announced its financial results for the second quarter of fiscal year 2026, ending July 27, 2025. The company reported record net sales of $257.6 million, a 20% increase from the previous year, and improved gross margins. Despite a GAAP operating margin loss, the non-GAAP adjusted operating margin showed significant improvement. The results reflect strong financial performance driven by customer engagement and operational discipline, with a focus on debt reduction and capturing high-growth opportunities.
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.