TD Cowen started coverage of Semtech with a Buy rating and a $75 price target, saying the analog chipmaker is positioned to benefit from rising demand for high-speed datacenter connectivity products and is showing early progress under new management.
The broker said Semtech’s expertise in mixed-signal and signal integrity technology gives it broad exposure across cloud infrastructure, telecom, smartphones and industrial IoT.
Its FiberEdge and CopperEdge components, used in optical and copper interconnects, are viewed as industry-leading and well placed to gain share in new categories such as active copper cables and linear pluggable optics.
TD Cowen estimates the company could generate more than $1 billion in datacenter revenue alone by 2029.
Outside cloud infrastructure, Cowen said Semtech’s PerSe capacitive sensing chips are gaining adoption in smartphones and wearables as touch interfaces expand, while its circuit protection components remain widely used by Apple. Its LoRa low-power networking technology also continues to see new industrial applications.
The firm pointed to management changes as a key catalyst. Semtech hired former Applied Materials executive Hong Hou as CEO and Mark Lin as CFO, and is moving to divest much of the IoT business acquired in its 2022 Sierra Wireless deal. Cowen said the move has allowed the company to de-lever and refocus on core signal integrity products.
Cowen models roughly $2 a share in earnings power from the semiconductor business on a standalone basis, and values the company at 28 times its fiscal 2027 earnings estimate of $2.72.
It said the premium to Semtech’s historical multiple is justified given its potential to re-establish itself as a leading supplier to high-speed networking customers.
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