Why Is Semtech (SMTC) Stock Rocketing Higher Today

Radek Strnad /
2023/06/08 9:31 am EDT

What Happened:

Shares of semiconductor company Semtech (NASDAQ:SMTC) jumped 14.7% in the pre-market session after the company reported first-quarter results that beat analysts' revenue and earnings per share (EPS) estimates. Inventory levels improved significantly. On the other hand, there was some gross margin deterioration. Revenue guidance for the next quarter was below Consensus, while the EPS guidance was roughly inline. Management added that "we see signs of business stabilization...With an expanded highly differentiated IoT portfolio, combined with our best-in-class High Performance Analog portfolio, we are well positioned to emerge stronger from this current cycle". In addition, the company announced Paul Pickle as the new President and Chief Executive Officer to replace Mohan Maheswaran, who announced his retirement in March, 2023. Mr. Pickle has served as President and Chief Eexecutive Officer and member of the Board of Directors of Lantronix since April 2019. Under his leadership, Lantronix experienced remarkable growth, with revenue expanding approximately threefold and market capitalization doubling. Overall it was a mixed quarter for the company. However, the market responded positively to the news of the new leadership, as reflected in the positive sentiment after the earnings announcements.

What is the market telling us:

Semtech's shares are somewhat volatile and over the last year have had 23 moves greater than 5%. But moves this big are very rare even for Semtech and that is indicating to us that this news had a significant impact on the market's perception of the business. The previous big move was three months ago, when the company gained 5.87% on the news that B. Riley Securities analyst Craig Ellis upgraded the stock's rating from Neutral to Buy and raised the price target from $34 to $52. 

Semtech is down 7.19% since the beginning of the year, and at $26.91 per share it is trading 56.8% below its 52-week high of $62.33 from July 2022. Investors who bought $1,000 worth of Semtech's shares 5 years ago would now be looking at an investment worth $539.36.

Is now the time to buy Semtech? Access our full analysis of the earnings results here, it's free.