Citi Reiterates Buy on Semtech, Increases PT to $35

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.