Semtech (SMTC) Stock Forecast & Price Target

Semtech is expected to continue seeing growth and increased profits through the divestment of products and changes in product mix. The company is also experiencing growth in their data center and LoRa platforms, which is expected to continue in the next quarter. Potential expansion through partnerships and strong gross margin and EPS outlook add to the positive outlook, but there are potential risks to consider such as industry volatility and challenges with recent acquisitions.

Semtech is expanding their portfolio in various segments including photonics, bringing on photodiode design resources, which is expected to increase content per transceiver to $80-$90, in line with industry transitions. Divestiture of the Cellular Module business is in its final stages and once finalized, Non-GAAP gross margin is expected to increase to ~60%, and Non-GAAP operating margin to approach 30%. The company is experiencing robust demand and is set for a strong C2H26 and CY27, driven by better than expected optical module shipments, share gains in TIAs, and growing demand for LoRa+ solutions. Looking to CY28 and beyond, the company is engaged with multiple customers for multi-wavelength DWDM lasers and TIA array solutions for NPO applications, which aligns with our Buy outlook and $200 PT, based on a 50x FY29 NG EPS estimate of $4.00, suggesting upside potential.