Semtech (SMTC) PT Bumped to $19 at RBC Capital Ahead of Oct. Qtr; Remains on Sidelines

RBC Capital analyst, Mitch Steves, published an October quarter preview on Semtech (NASDAQ: SMTC) explaining why he remains neutral on the shares at this time. He believes there is the possibility of a turnaround in 2016 but near term the stock faces challenges. That said investors shouldn't skate with their heads down and he provides a list of 5 things to watch. No change to Sector Perform rating but the PT increases to $19 from $17.

In the Jul-qtr Power and High Reliability and Signal integrity saw positive trends, however, the uptick was not able to offset the declines in both the protection and proximity business. Given the severity of the declines (particularly with regards to Korean handsets) we think revenue stability and high level commentary around 2016 trends will act as focal points during the conference call.

Top 5 Investor Focal Points:

1) Samsung: Given recent weakness in the Korean smartphone market investors will focus on comments surrounding growth rates from its largest customer

2) Proximity Business: Investors will look for commentary surrounding a time-line to stability within the proximity sensor business

3) Operating Expenses: Currently the Company has >40% OPEX spending as a percentage of sales which is driving lower than expected operating margins

4) Triune Systems: The Company has a potential $86M earn-out payment which will give investors an idea of integration progress

5) End-Market Commentary: Consumer and Communication segments will likely be the focal points as volatility in both spaces remain

For an analyst ratings summary and ratings history on Semtech Corp. click here. For more ratings news on Semtech Corp. click here.

Shares of Semtech Corp. closed at $18.93 yesterday.

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