On Wednesday, Piper Sandler maintained its Overweight rating on Semtech Corp . (NASDAQ:SMTC (NASDAQ:SMTX)) stock, with a steady price target of $60.00. The firm's decision follows Semtech's strong performance, surpassing Street expectations for its second-quarter results and providing an optimistic outlook for October.
The company has demonstrated a robust recovery across most of its traditional business segments, aided by low inventory levels at the start of the quarter.
Management highlighted the commencement of revenue generation from their Advanced Communications Controller (ACC) starting in the October quarter, with expectations of continued growth through the calendar year 2025.
Semtech's initial ACC adopter has been joined by additional customers showing interest in the technology. This diversification in clientele is anticipated to contribute significantly to the company's revenue streams.
In addition to ACC, Semtech has also gained traction in the Low Power Optical (LPO) market. Revenues from this venture are expected to materialize in the second half of fiscal year 2026. The management's strategic focus is not only on expanding into new markets but also on strengthening the company's financial position by divesting certain assets.
The company's commitment to reducing its leverage through these divestitures was reaffirmed by management. This strategy is part of Semtech's broader efforts to streamline its operations and focus on high-growth areas. The positive developments and strategic initiatives have led Piper Sandler to single out Semtech as its top small-cap pick, reflecting confidence in the company's future performance and market positioning.
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