On Tuesday, Semtech Corp . (NASDAQ:SMTC (NASDAQ:SMTX)) saw an increase in its stock price target, which was raised from $60.00 to $66.00 by Northland, while the firm kept an Outperform rating on the stock.
The adjustment comes after Semtech's recent equity offering, which Northland believes will be beneficial to the company's financials. According to Northland, the offering will result in an annual reduction of $48 million in interest expenses for Semtech.
The updated model reflects an optimistic outlook for the company's non-GAAP earnings, which are now projected to rise to $1.89 for FY26/CY25, up from the previous estimate of $1.65. Looking further ahead, Northland has introduced a non-GAAP earnings forecast of $2.65 for FY27, based on anticipated revenues of $1.26 billion.
The revised stock price target of $66 is grounded in a valuation multiple of 25 times the projected FY27 (January) non-GAAP earnings of $2.65. The decision to maintain an Outperform rating indicates Northland's continued positive stance on Semtech's stock performance in the market.
The equity offering by Semtech is seen as a strategic financial move, potentially strengthening the company's balance sheet and enhancing shareholder value through the reduction of interest-related costs. The updated estimates and price target from Northland suggest confidence in Semtech's growth trajectory and financial management over the coming years.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.