CAMARILLO, Calif. - Semtech (NASDAQ:SMTC) Corporation reported better-than-expected second-quarter results, sending its shares up over 6% in premarket trading Wednesday.
The semiconductor company posted adjusted earnings per share of $0.11, beating analyst estimates of $0.09. Revenue came in at $215.4 million, surpassing the consensus forecast of $212.3 million and rising 4% sequentially.
"Semtech continues to execute on an established strategy to grow our business, as demonstrated by solid second quarter financial performance and a favorable outlook for our third quarter that forecasts an acceleration of this growth," said Hong Hou, Semtech's president and chief executive officer.
The company's adjusted gross margin improved to 50.4% in Q2, up 60 basis points sequentially. Adjusted operating margin expanded to 14.2%, a 200 basis point increase from the previous quarter.
For the third quarter, Semtech expects revenue between $228 million and $238 million, with the midpoint above the current analyst consensus of $232.4 million. The company forecasts adjusted EPS of $0.20 to $0.26, compared to the $0.23 Wall Street estimate.
Mark Lin, Semtech's CFO, noted: "Continued improvements in these metrics, along with net sales growth in our third quarter outlook, demonstrate our commitment to prudent cost control while continuing to grow the business."
Following the report, analysts at Stifel reiterated a Buy rating on SMTC (NASDAQ:SMTX) stock and lifted their price target from $45 to $50.
"As SMTC continues to benefit from the cyclical recovery, we also believe the company is well-positioned with secular drivers across its product portfolio, most notably within DC/AI-based applications," analysts wrote
"We also believe the company could potentially divest assets not supporting the company’s LT-positioning, an additional potential catalyst positioning SMTC to surpass market growth in the coming years," they added.
Roth MKM analysts also voiced bullish comments, highlighting that the Active Copper Cables (ACC) opportunity for SMTC "continues to expand beyond prior expectations with the initial commercial ramp starting in 4Q25."
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