Stifel maintained its buy recommendation and $188 price target for Semtech Corp. on Tuesday, citing the semiconductor company's stronger-than-expected quarterly performance and improved guidance.
The brokerage raised its revenue and earnings projections for Semtech following a fiscal second-quarter report that exceeded estimates. Stifel had projected revenue of $328.64 million for the period, but Semtech reported $341.9 million, a 4.2% beat. Adjusted earnings per share came in at $0.71, surpassing the $0.61 estimate and Stifel's own forecast by $0.10.
For the fiscal third quarter, Stifel's midpoint revenue projection was 13.6% above its prior estimate, while the non-GAAP EPS projection exceeded its forecast by $0.32. The company's stock has gained 73% year-to-date and 117% over the past 12 months, closing at $124.82 on August 25, up 3.23% for the session.
Semtech's net leverage improved from 1.4x to 1.1x, reflecting stronger balance sheet positioning. The company's valuation multiples under Stifel's $188 target imply a 2027 enterprise-value-to-revenue multiple of 9.6x and a price-to-earnings ratio of 35.5x.
The brokerage highlighted the Data Center and LoRa subsegments as key growth drivers for fiscal year 2028, noting Semtech's tenth consecutive quarter of revenue growth. Analysts at InvestingPro noted that 13 analysts have revised their earnings estimates upward for the upcoming period.
Semtech's definitive agreement to divest its Sierra Wireless cellular modules business remains on track for completion in the fiscal fourth quarter of 2027, according to company disclosures. Gross margin expansion is increasingly attributed to product mix rather than divestitures alone.
Needham maintains a higher price target of $200, while the current analyst target range spans from $155 to $230.
