Shares in Semtech Corp. have been holding steady since releasing its fiscal third quarter financial results.
The stock price of the Camarillo semiconductor and Internet-of-Things products manufacturer has stayed above $60 a share in closing prices since late November. It reached its 52-week high of $69.10 on Dec. 4.
The share price closed at $62.10 on Jan. 2.
In late November, with the release of fiscal third quarter earnings, the stock price increased by 18% from the close of $53.44 on Nov. 25 and the following day’s close of $63.11.
Semtech reported after the market closed on Nov. 25 an adjusted net income of $20.3 million (26 cents a share) for the quarter ending Oct. 27, which is a considerable increase from the adjusted net income of $1.5 million (2 cents) in the same period of the previous year. Revenue increased by 18% from the third quarter of the prior year to $237 million.
Beating Wall Street estimates
The results beat Wall Street expectations.
The average estimate of six analysts surveyed by Zacks Investment Research called for earnings of 24 cents on revenue of $233 million.
Hong Hou, the chief executive of the Ventura County manufacturer, said he was pleased to report growth across each of the company’s end markets, particularly in data centers where it projects AI-driven product demand to be a long-term and transformational growth engine for the company.
“Our results validate that our customers and target markets are moving toward us and highlight the effectiveness of our initiatives to drive market share gain and SAM (software asset management) expansion,” Hou said in a statement.
All three of Semtech’s business units saw increases in revenue in the fiscal third quarter.
The infrastructure end market showed an increase of 58% year-over-year to about $66 million. That market includes data centers, passive optical networks and fiber to the home connections.
The high-end consumer end market went up by 7% to $40 million, while the industrial products market jumped by 9% to $131 million. That market includes long-range, low power, or LoRa, products which contributed $29 million to the revenue for a year-over-year increase of 104%.
“Increasing consumption of recent generation LoRa products signals market adoption of enhanced capabilities,” the company said in its presentation of the fiscal third quarter results.
As for its outlook for the current fourth quarter, which ends in January, Semtech said it expects earnings of between 29 cents to 35 cents a share on revenue in the range of $245 million to $255 million.
Mark Lin, Semtech’s executive vice president and chief financial officer, said that the reported results and outlook demonstrate leverage in its operating model, targeting healthy net sales growth along with prudent spending.
“We reported positive operating and free cash flows, and consistent with our previously stated capital allocation priority, we made principal prepayments on our credit facility in both the third and fourth quarters of this fiscal year,” Lin said in a statement.
The company last month sold more than 10.5 million shares of its common stock in a public offering for $63 a share, making it a gross sum of approximately $661 million.
“The company intends to use the net proceeds from the offering for the repayment of certain indebtedness under the company’s third amended and restated credit agreement…with the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent,” it said in a release.
