Value
4.6/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 0.6 |
| P/S | 2.9 |
| Fwd P/E | 5.5 |
| PEG | 6.6 |
| Analyst target | 7.5 |
- ▸Forward P/E: 23.2x
- ▸PEG: 1.10
SMTC · Why this verdict
Why Semtech (SMTC) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score6.1/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Semtech has delivered earnings beats in 3 of its last 4 quarters, trades above its 200-day moving average with rising volume accumulation, but the stock has already reached analyst price targets with only 2.2% upside remaining — creating an unfavorable entry point despite solid execution momentum.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
At a forward P/E of 44.9x and a PEG of 1.98, the stock is expensive relative to its growth rate, leaving little room for valuation multiple expansion and significant downside if growth disappoints. Valuation breakdown | Revenue growth accelerates to at least 20% year-over-year, compressing the PEG ratio to below 1.5 and justifying the current multiple. | ↓Deteriorating |
| CounterSemiconductor companies often carry elevated multiples during growth phases and the strong Piotroski F-Score of 8/9 reflects underlying business quality that may warrant a premium. | ||
Semtech has beaten analyst earnings estimates in 3 of the last 4 quarters with an average positive surprise of 6.1%, demonstrating consistent execution above Wall Street expectations. Earnings | The beat streak extends to 4 of 5 over the next 12 months, with average EPS surprises remaining above 5%. | ↓Deteriorating |
| CounterThe stock already trades near analyst targets, suggesting the market has fully priced in the beat streak and forward execution must exceed even elevated post-beat expectations. | ||
With only 2.2% upside to the analyst consensus price target of $178 and an asymmetry ratio of 0.15 against a 7% downside risk, the risk-reward at current prices is deeply unfavorable for new entry. Targets | Analysts raise price targets above $200, restoring at least 15% upside, over the next 12 months as revenue growth accelerates. | ↓Deteriorating |
| CounterIf the company continues to beat estimates and analysts raise their targets, the current price may simply be the new floor rather than a ceiling. | ||
The stock trades above its 200-day moving average with rising on-balance volume accumulation, indicating institutional buying interest and a positive intermediate-term price trend. Momentum breakdown | The stock maintains its position above the 200-day moving average for at least 9 of the next 12 months. | ↓Deteriorating |
| CounterThe stock is near its 52-week high with only 1.7% remaining before hitting that ceiling, increasing the risk of a reversal as near-term momentum runs out of room. | ||
At a forward P/E of 44.9x and a PEG of 1.98, the stock is expensive relative to its growth rate, leaving little room for valuation multiple expansion and significant downside if growth disappoints.
↓DeterioratingValuation breakdown
- Expectation
- Revenue growth accelerates to at least 20% year-over-year, compressing the PEG ratio to below 1.5 and justifying the current multiple.
CounterSemiconductor companies often carry elevated multiples during growth phases and the strong Piotroski F-Score of 8/9 reflects underlying business quality that may warrant a premium.
Semtech has beaten analyst earnings estimates in 3 of the last 4 quarters with an average positive surprise of 6.1%, demonstrating consistent execution above Wall Street expectations.
↓DeterioratingEarnings
- Expectation
- The beat streak extends to 4 of 5 over the next 12 months, with average EPS surprises remaining above 5%.
CounterThe stock already trades near analyst targets, suggesting the market has fully priced in the beat streak and forward execution must exceed even elevated post-beat expectations.
With only 2.2% upside to the analyst consensus price target of $178 and an asymmetry ratio of 0.15 against a 7% downside risk, the risk-reward at current prices is deeply unfavorable for new entry.
↓DeterioratingTargets
- Expectation
- Analysts raise price targets above $200, restoring at least 15% upside, over the next 12 months as revenue growth accelerates.
CounterIf the company continues to beat estimates and analysts raise their targets, the current price may simply be the new floor rather than a ceiling.
The stock trades above its 200-day moving average with rising on-balance volume accumulation, indicating institutional buying interest and a positive intermediate-term price trend.
↓DeterioratingMomentum breakdown
- Expectation
- The stock maintains its position above the 200-day moving average for at least 9 of the next 12 months.
CounterThe stock is near its 52-week high with only 1.7% remaining before hitting that ceiling, increasing the risk of a reversal as near-term momentum runs out of room.
Per-dimension breakdown
Quality
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 7.9 |
| ROA | 3.9 |
| Gross margin | 6.6 |
| Op margin | 6.5 |
| Net margin | 6.6 |
| Current ratio | 6.1 |
| FCF quality | 6.3 |
| Moat | 8.2 |
| Piotroski F | 10.0 |
- ▸Wide economic moat
- ▸Compounder quality: strong returns + growth
- ▸Strong Piotroski F-Score: 9/9
Growth
10.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
| EPS growth | 10.0 |
- ▸Strong growth: 33% YoY
Momentum
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 0.0 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
7.8/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 5.5 |
| Analyst rating | 8.6 |
| Price target | 9.3 |
- ▸Analyst upside: 43%
Insider
2.4/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 0.0 |
| notable moves | 3.0 |
- ▸Modest insider selling — $5,397,190 (0.043% of mkt cap)
- ▸Institutions reducing
Peer rank
4.1/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.2 |
| quality rank | 6.5 |
| growth rank | 5.2 |
Technical
3.8/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.3 |
| support resistance | 2.3 |
| 52w position | 6.5 |
| gap | 5.0 |
Risk (lower is worse)
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.5 |
| days to cover | 7.4 |
| volatility | 0.0 |
| put call | 8.7 |
| implied vol | 0.8 |
| max pain risk | 7.0 |
| beta | 2.2 |
| debt equity | 6.8 |
- ▸High IV: 75%
- ▸Concentration risks: 2 MED (10-K Item 1A)
Catalyst
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 7.3 |
| news activity | 7.0 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Heavy insider selling.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:INSIDER_FLOORPassed (7)
- MOMENTUM:6.9>=5.5
- ASYMMETRY:1.6>=1.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:80d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (0)
none
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
1.63
Upside
+24.4%
Downside
15.0%
Sizing output
AVOID
SetupBreakout — Golden cross, above all MAs, RSI 45, MACD bullish
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — Beta 2.35>1.3
Investment implication
The SELL_IF_HOLDING verdict reflects clean gate clearance against Growth at 10.0 and asymmetric R:R of 1.63.
The strongest dimensions are Growth at 10.0, Sentiment at 7.8, and Quality at 6.9; the weakest are Insider at 2.4, Technical at 3.8, and Peer rank at 4.1. The V9 engine cleared all gates with 1 warning, producing an asymmetric reward-to-risk of 1.63 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Earnings Execution Three Consecutive Beats
Trip ifEPS surprise falls below 0% in at least 2 of the next 4 quarters, signaling the execution edge has deteriorated.
- P2Target Reached Limited Near Term Upside
Trip ifAnalyst consensus price target rises above $210, restoring at least 20% upside from current levels above $174.
- P3Expensive Valuation At Cycle High
Trip ifForward P/E remains above 40x while revenue growth falls below 10% year-over-year for 2 consecutive quarters.
- P4Above 200ma Positive Technical Trend
Trip ifPrice drops below $155, more than 11% below the current $174, confirming a break below the 200-day moving average support.