Semtech Corporation (NASDAQ: SMTC) saw its shares plummet 5.83% in pre-market trading on Tuesday, following the release of its third-quarter earnings report and fourth-quarter guidance. The semiconductor company's stock decline comes as investors grapple with mixed forward-looking projections, overshadowing the positive Q3 results.
For the third quarter, Semtech reported adjusted earnings per share of $0.48, surpassing the analyst consensus estimate of $0.44. This represents a significant 84.62% increase from the same period last year. Revenue for the quarter came in at $267 million, slightly beating the expected $266.4 million and marking a 12.75% year-over-year growth.
However, the company's fourth-quarter outlook appears to be the primary driver behind the stock's pre-market decline. Semtech projects Q4 adjusted earnings per share of $0.43, plus or minus $0.03, which falls slightly below the consensus estimate of $0.44. On the revenue front, the company expects $273 million, plus or minus $5 million, which is above the analyst expectations of $265.9 million. This mixed guidance, coupled with potential concerns about future growth prospects in the semiconductor industry, seems to have outweighed the solid Q3 performance in investors' minds.
Despite the negative market reaction, some analysts remain optimistic about Semtech's prospects. Piper Sandler raised its target price for the company to $70 from $65, suggesting potential upside from current levels. However, the market's immediate response indicates that investors may need more convincing about Semtech's growth trajectory in the face of broader industry challenges.
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