Semtech Corporation (NASDAQ: SMTC) designs,
develops and markets analog and mixed signal semiconductor products. The devices handle power management, timing circuitry, current conversion, voltage surges, parametric measurement and other functions in computers, test equipment, cell phones, network equipment and base stations. Customers include Apple (NASDAQ: AAPL), Dell (NASDAQ: DELL) and Hewlett-Packard (NYSE: HPQ).
The firm surprised the Street last week, when it reported Q1 EPS of 22 cents and revenues of $74.4 million. Analysts had been expecting 20 cents and $72 million. The sales total was a Q1 company record. Management also guided Q2 EPS to 23-24 cents (22 cent consensus).
The news
kept SMTC shares cycling through a positive 10-week trading channel. The price is currently consolidating at the base of that channel, where an oversold MACD technical parameter suggests the potential for a rise back toward the top.
Brokers recommend the issue with six "strong buys", two "buys" and six "holds". Analysts see a 15% growth rate, through the next year. The SMTC Price to Book ratio (3.08), Sales Growth rate (22.85%), EPS Growth rate (83.33%), Operating Margin (15.16%) and Net Profit Margin (16.78%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 95% of the outstanding shares. The stock is one of those used to calculate the S&P 400 MidCap Index. Over the past 52 weeks, it has traded between $11.27 and $21.11. A stop-loss of $15.20 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.
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