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Taking Stock of Semtech’s New Risk Factor
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Taking Stock of Semtech’s New Risk Factor

Shares of the provider of high-performance analog and mixed-signal semiconductors and advanced algorithms, Semtech Corp. (SMTC), have climbed about 7.7% over the past five trading sessions.  This week, the company delivered better-than-expected fourth-quarter top-line and bottom-line results.

Revenue jumped 15.7% year-over-year to 190.5 million, beating consensus estimates by $1.2 million. Earnings per share of $0.70 came in better than consensus forecasts by $0.01.

For Fiscal 2022, the company garnered net sales of $740.9 million and earnings per share of $2.61. Gross margins expanded by 180 basis points during this period to 63.3%. Impressively, Semtech saw a 38.7% jump in Wireless and Sensing products during the year and 13.9% growth in Signal Integrity products.

Management noted that focus on a more sustainable planet and investments in technologies that enable customers to deliver “low-power solutions for remote sensing and analytics for the Internet of Things (IoT), bandwidth expansion, and reduction of electronic waste” contributed to the company’s 2022 performance and position Semtech for multi-year top-line growth.

Looking ahead, for Q1, Semtech sees revenue landing between $195 million and $205 million. Earnings per share are expected to be in the range of $0.50 and $0.58. With these developments in mind, let’s have a look at what’s changed in Semtech’s key risk factors that investors should know.

Risk Factors

According to the TipRanks’ Risk Factors tool, Semtech’s top risk category is Legal & Regulatory, contributing 10 of the total 42 risks identified for the stock. In the most recent report, the company added one key risk factor under the Ability to Sell risk category.

Semtech highlighted that a variety of factors in the 5G infrastructure market could impact its revenue growth and financial performance. The market may not evolve in the way Semtech anticipates. Overall spending on 5G infrastructure could be lower if macro conditions worsen, and evolving laws and regulations associated with 5G or 5G supplies could limit its global adoption or impact Semtech’s long-term expectations.

Moreover, if the company’s products do not receive market acceptance, then its financials may suffer as well. Finally, as the 5G market is yet to fully develop, product demand may vary from period to period and could be unpredictable.

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