SMTC Stock: Semtech Tops Targets But Guides Down

Chipmaker Semtech (SMTC) late Wednesday beat Wall Street’s targets for its fiscal second quarter but badly missed the mark with its outlook for the current quarter. SMTC stock tumbled in extended trading.

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The Camarillo, Calif.-based company earned an adjusted 87 cents a share on sales of $209.3 million in the quarter ended July 31. Analysts had expected Semtech earnings of 85 cents a share on sales of $208.3 million. On a year-over-year basis, Semtech earnings rose 34% while sales climbed 13%.

For the current quarter, Semtech forecast adjusted earnings of 63 cents a share on sales of $175 million. That’s based on the midpoint of its outlook. However, Wall Street was looking for earnings of 90 cents a share on sales of $215.6 million in the fiscal third quarter. In the year-earlier period, Semtech earned 74 cents a share on sales of $194.9 million.

“The macro demand environment is deteriorating and, as a result, we are anticipating a weaker second half performance,” Chief Executive Mohan Maheswaran said in a news release.

SMTC Stock Retreats After Report

In after-hours trading on the stock market today, SMTC stock dropped 7.8% to 42.60. During the regular session Wednesday, SMTC stock slid 1.4% to close at 46.19.

SMTC stock has fallen since the company announced Aug. 2 that it intends to buy Sierra Wireless (SWIR) for $1.2 billion.

Sierra Wireless makes networking products that span cellular networks, data centers and the Internet of Things.

Semtech makes analog and mixed-signal semiconductor products for infrastructure, consumer and industrial equipment. A key focus area for Semtech is LoRa technology for Internet of Things applications. LoRa, short for “long range,” is a low-power, wide-area-network wireless technology.

SMTC stock ranks No. 14 out of 34 stocks in IBD’s fabless semiconductor industry group, according to IBD Stock Checkup. It has an IBD Composite Rating of 51 out of 99. IBD’s Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.

Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.

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