E Semtech Corporation - A Fair Value Report

This report is about Semtech Corporation (SMTC) and covers the company’s fiscal year ended January 31, 2021. Listed earnings and metrics utilizing earnings are for that specific 12 month time period unless otherwise noted. Unaudited or reviewed financial information is not a part of, nor included in, this report.

macro photography of black circuit board
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Risk

Past and future gains contained herein are based on actual and anticipated earnings, actual and anticipated dividends, and actual and anticipated price appreciation. Valuations, while given as a specific amount, are always within a valuation range. Investors should be aware that any investment has the potential for loss, and past performance is no guarantee of future results.

What They Do

Semtech is a supplier of high-performance analog and mixed-signal semiconductors and advanced algorithms. The company designs develop, manufactures, and markets a wide range of products for commercial applications, the majority of which are sold into the enterprise computing, communications, high-end consumer, and industrial end markets. Industry peers include Analog Devices, Inc. (NYSE: ADI) and Maxim Integrated Products, Inc. (Nasdaq: MXIM).

Short-Term Target

My current short-term target for the stock is $72.53 with an initial trailing stop set at $69.27. Based on a recent price of $70.32, the upward price movement will find resistance at $71.91 and again at $74.49, with final resistance found at $77.18. Downward price movement will find support at $67.58 and again at $64.94, with final support found at $57.98.

One-Year Growth Price Target

My one-year growth price target is actually a price target range, determined by adding year-over-year earning growth to the prior year's annual dividend yield and dividing the result by the current annual price to earnings ratio.

For this stock, my current one-year growth price target range is $72-$74.

Volatility Adjustment

There are different metrics available to help investors determine the volatility of a particular stock as compared to the volatility of the market as a whole. To me, the beta ratio is the metric that is the most representative of a stock’s volatility. A beta ratio of less than 1 means that the security’s price will be less volatile than the market, while a beta ratio greater than 1 indicates that the security’s price will be more volatile than the market.

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Financial statement data was obtained from the company’s most recent Annual Report ...

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