Semtech shares soar on 3rd-qtr results, forecast

Associated Press

CAMARILLO, Calif. (AP) — Shares of Semtech Corp. soared in Thursday trading after the semiconductor maker reported better-than-expected results for its fiscal third quarter and a rosy forecast for its fourth quarter.

THE SPARK: The company on late Wednesday posted net income of $16.6 million, or 25 cents per share, for the three months ended Oct. 28. That compared with $27 million, or 40 cents per share, in last year's quarter. It earned 53 cents per share versus 52 cents per share on an adjusted basis.

Semtech's revenue increased nearly 30 percent to 160.9 million.

Analysts, on average, were expecting the company to earn 43 cents per share, on revenue of $151.4 million, according to FactSet.

The company forecast adjusted earnings of 41 cents to 45 cents per share for the fourth quarter, on revenue of $146 million to $152 million. Analysts had forecast earnings of 41 cents per share on revenue of $148.6 million.

THE BIG PICTURE: Despite a challenging economic environment, Semtech posted record revenue, expanded its margins and grew its profits. The company has also benefited from a recent acquisition of Gennum Corp. The company, based in Camarillo, Calif., makes analog and mixed-signal semiconductors used for high-end consumer, computing, communications and industrial equipment.

THE ANALYSIS: Citi analyst Terence Whalen said the company is benefitting from both the Gennum acquisition and its earlier purchase of Sierra Monolithics. The two could help boost results higher throughout 2013, Whalen said. He kept a "Buy" rating on the shares and raised his price target to $34 from $31.

SHARE ACTION: Shares jumped nearly 13 percent to $28.12 by midday. Its stock has traded between $21.19 and $30.46 in the past 52 weeks.