Citi reiterated its Buy rating on Semtech SMTC. At the same time, Citi raised its price target on the company from $31 to $35. In a research report published today, Citi stressed its optimism about the company as its Q1 results and Q2 guidance managed to beat market expectations.
In the report, Citi states, "SMTC stock ticked up 7% after market because SMTC's F1Q results
as well as F2Q outlook handily beat consensus expectation helped by continued
strength in consumer (34% sls) and communications (41% sls). Management
reaffirmed our confidence in SMTC's long-term growth prospects, powered by network
optical, smartphone and tablet. Even though gross margin has been consistently above
its 55%-60% target past four quarters, we still see room for further expansion driven by
yield improvement and product mix. We raise SMTC's target to $35 from $31 on higher
forecast and higher multiples and reiterate Buy."
On Wednesday, Semtech added 1.04% to its value to close the day at $27.29. Its shares surged in today's pre-market trading, however, rising 7% to $29.20.
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