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Based in Camarillo, California, Semtech Corp. designs and manufactures analog and mixed-signal semiconductor products, as well as cutting-edge algorithms.
These technologies are supplied to infrastructure operators, high-end consumers, and several industrial end-user markets. (See SMTC stock charts on TipRanks)
Q2 of Fiscal 2022 Earnings Results
For the three months period ended on Aug. 1, 2021, Semtech made sales for total revenues of $185 million, up nearly 30% year over year, beating consensus by $2.1 million. Total revenues were driven by record sales of wireless and sensing products as well as signal integrity products.
Adjusted EPS also increased year-over-year, as it was $0.65 for the quarter in question, compared to $0.43 for the same quarter of the year before, topping the consensus by 3 cents.
Semtech’s second quarter operating cash flow hit a record amount of $53 million, increasing 42.4% year over year.
Year-over-year, the GAAP gross margin rose 100 basis points to 62.4%, while the non-GAAP gross margin jumped 90 basis points to 62.7%.
Additionally, Semtech bought back 639,519 shares of its common stock, spending $42.00 million in the quarter.
Industry Growth Perspectives
The semiconductor industry is one of the industries with the best growth prospects.
Analog and mixed-signal semiconductor products are used in the production of countless technologies, such as households’ appliances, electronic devices, and many other consumer applications. The semiconductors are also used in infrastructure and industrial applications, as well as in medical and communications applications.
In the long term, the demand for semiconductors will trade higher and higher in response to the global need to become more technological, across industries and daily human activities.
This is because polluting activities must be replaced with cleaner ones, while economic activities and the entire world must become increasingly efficient and interconnected.
A huge contribution to the demand for semiconductors will come from the Internet of Things (IoT) and the infrastructure segment, as they will introduce and welcome the most advanced technologies.
As long as Semtech Corp. focuses on IoT and infrastructure businesses, the company will be well-positioned to capitalize on the opportunities that the industry of semiconductors will create throughout the years.
Looking Ahead to the Third Quarter of Fiscal 2022
Semtech forecasts adjusted EPS to be in the range of $0.68 to 0.76, which is well above the consensus average estimate of $0.47.
Total revenues should rise 1.62% – 7.03% to between $188 million and $198 million, versus analysts’ expectations for total revenues of $189.72 million.
Wall Street’s Take on Semtech Corp.
In the last 3 months, seven Wall Street analysts issued 12-month price targets for Semtech Corp. The average analyst Semtech Corp. price target is $85.14, versus the closing price of $78.15 on Septemer 3. The price target implies an 8.9% upside. The analyst rating consensus is a Strong Buy rating, based on 6 Buy, 1 Hold and zero Sell ratings.
Summary
Semtech Corp. operates in a growing industry, and it appears that Semtech is highly able to take advantage of the tailwinds as activities keep on performing well.
The Internet of Things and the infrastructure segment should give a strong boost to the demand for semiconductors.
With a strong focus on these markets, the company’s portfolio of activities seems on track to continue to deliver a record performance.
Disclosure: At the time of publication, Alberto Abaterusso did not have a position in any of the securities mentioned in this article.
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