Semtech Executing Well, BlueFin Expects A Modest Estimate Beat

BlueFin expects Semtech Corporation (NASDAQ: SMTC) to modestly beat consensus estimates for the second quarter and guide revenues flattish to up slightly for the third quarter when it releases July quarter earnings on August 31.

Semtech guided revenues of $130-$140 million, up 3 percent at the midpoint and the brokerage expects Semtech to post revenues in the upper-end of their guided range. The guidance reflected solid growth expectations in the Consumer (21 percent), Industrial (23 [percent) and Data Center (15 percent) segments. Wall Street consensus for the July quarter is $135.3 million and EPS of $0.33.

"We believe the company's guidance was relatively conservative, requiring only 41% turns after turning 53% of their business in the April quarter. Our channel reads suggest SMTC saw upside in China smartphones and their global Industrial business, while Data Center was also strong," analyst Paul Peterson wrote in a note.

 Peterson also expects modest growth in Consumer driven by China smartphone, while Samsung is projected to be down.

Wall Street consensus calls for revenue of $137.3 million for the third quarter, with EPS of $0.36.

The analyst expects a strong second half for the company based on the breadth of the data center deployments, in addition to future opportunities from its low-power radio technology (LoRa).

Meanwhile, the company's believes LoRa can become a $100 million business in three years.

"We think it may take a little longer to drive these network deployments globally. However, we do think the LoRa story bears watching as it could help the company grow significantly faster than the industry in the coming years or make SMTC an attractive acquisition target for this key IoT building block," Peterson added.