Semtech Corporation (NASDAQ: SMTC) in the first quarter of FY 18 has reported the adjusted earnings per share of $0.44, beating the analysts’ estimates for the adjusted earnings per share of $0.41. The company had reported the adjusted revenue growth of 9.6 percent to $143.8 million compared to $131.1 million in the first quarter of FY 18, missing the analysts’ estimates for revenue of $146.4 billion. As a result, the stock lost over 4.6% (as of 1:47PM EDT on June 1st, 2017; Source: Finance).
The first quarter GAAP net sales included $5.3 million expense for the Comcast warrant. The Q1 GAAP gross margin has decreased 60 basis points sequentially to 59% as the benefit of a more favorable product mix was offset by the impact of the higher sequential Comcast warrant expense.
Moreover, in the first quarter, shipments into Asia represented 75% of total net sales, North America was 18% and Europe was 7%. The total sales to distribution represented approximately 64%, and the net sales represented approximately 36%. Q1 bookings has increased sequentially and year-over-year and resulted in a book-to-bill firmly above 1. Those bookings accounted for approximately 41% of shipments during the quarter.
Additionally, in Q1 of fiscal 2018, the non-GAAP tax rate was 20.5%. In Q1, the cash flow from operations was approximate $10 million as Q1 is typically a seasonally weaker quarter as the company makes the annual bonus payments. The cash and investments in Q1 were $282 million, and the debt balance at the end of Q1 was over $240 million. In Q1, approximately 76% of the cash and investments were domiciled in international accounts, and 24% was based in the U.S. Further, Semtech Corporation has repurchased approximately $10 million or 300,000 shares of stock and the outstanding stock repurchase authorization stands at approximately $52 million. The primary use of cash continues to be to pay down the debt, make strategic investments and opportunistically repurchase the shares.
In the second quarter of FY 18, Semtech Corporation expects the Non-GAAP net sales to be in range of $150.0 million to $160.0 million. The Non-GAAP earnings per diluted share are expected to be in range of $0.43 to $0.49 for Q2.
Semtech Corporation stock has risen 66.01% in a year (source: Google Finance). According to tipranks.com, 4 analysts has covered the stock while recommend a “Strong Buy”. SMTC has an average price target of $41.50, which is a further upside of 8.64%.