SMTC - Semtech stock edges up; Northland sees value within 'a mess'

2023-04-11 09:14:09 ET

Semtech ( NASDAQ: SMTC ) shares got a mild lift in pre-market trading, Tuesday, rising 1.5% as Northland Capital Markets analyst Gus Richard started his coverage of the mixed-signal semiconductor company with an outperform rating.

Richard also set a price target of $32 a share on Semtech's ( SMTC ) stock, but it would almost be hard to see Richard's positivity through some of his comments about the company's current situation.

Semtech ( SMTC ) recently completed its acquisition of Sierra Wireless, which Richard called "a merger of equals" and said was "the most difficult acquisition, as employees fight for their status within the new company, if not their job." Additionally, Semtech ( SMTC ) Chief Executive Mohan Maheswaran, who has led the company since 2006, said last month that he will retire in the next 18 months, and Semtech ( SMTC ) also expects its "organic revenue" to decline between 40% and 50% from a year ago when it reports its fiscal first-quarter results.

"What we see is a mess," Richard said, in a research note. However, Richard added, "But we also see the value."

According to Richard, the things in Semtech's ( SMTC ) favor include the company naming a new CEO later this year, earnings and revenue estimates that are "hopefully conservative," and the involvement of activist investor LionPoint Capital, which owns a 4% stake in Semtech ( SMTC ) and will appoint two members to Semtech's ( SMTC ) board of directors. Richard was upbeat about LionPoint's involvement due to its "deep semiconductor experience."

Wall Street analysts and Seeking Alpha authors both have consensus buy ratings on Semtech's ( SMTC ) stock, while Seeking Alpha's Quant System, which historically outperforms the stock market, goes in the exact opposite direction, which has a strong sell rating on Semtech's shares .

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