Why Semtech Corporation Stock Popped Today

Image source: Semtech Corporation.

What happened

Shares of Semtech Corporation (NASDAQ: SMTC) jumped as much as 13.3% early Thursday, then settled to trade up 8.5% at noon after the analog and mixed-signal semiconductor specialist released stronger-than-expected fiscal-third-quarter 2017 results and encouraging forward guidance.

So what

Based on generally accepted accounting principles (GAAP), quarterly revenue climbed 18.5% year over year, to $137.2 million. On an adjusted (non-GAAP) basis, which accounts for $3.7 million in share-based compensation related to a previously announced issuance of a warrant to Comcast, Semtech's revenue was $140.9 million.On the bottom line, that translated to 100.6% growth in adjusted net income, to $24.3 million, or $0.37 per share.

Analysts, on average, were anticipating lower adjusted earnings of $0.36 per share, and lower adjusted revenue of $138.6 million.

Now what

"The strength we are experiencing from exciting growth markets that include theInternetof Things, hyper-scale datacenters and mobile devices is expected to continue and contribute to a better than seasonal outlook for our fourth fiscal quarter," said Semtech CEO Mohan Maheswaran."Our focus on divesting non-core assets while investing in new product platforms and maintaining Opex discipline should enable the Company to continue to leverage the growth we expect to see over the next several years."

To be sure, Semtech anticipates adjusted revenue in the current quarter of $134 million to $142 million, and adjusted earnings per diluted share of $0.33 to $0.37. By contrast, Wall Street was looking for fiscal Q4 revenue and earnings near the low ends of Semtech's guidance ranges.

In the end, this is a fairly straightforward beat as Semtech continues to drive profitable growth, and it's no surprise to see investors aggressively bidding shares up today.

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