Analysts Offer Insights on Consumer Goods Companies: Cypress Semicon (NASDAQ: CY) and Semtech (NASDAQ: SMTC)

By Ryan Adsit

There’s a lot to be optimistic about in the Consumer Goods sector as 2 analysts just weighed in on Cypress Semicon (CYResearch Report) and Semtech (SMTCResearch Report) with bullish sentiments.

Cypress Semicon (CY)

In a report released today, Rajvindra Gill from Needham maintained a Buy rating on Cypress Semicon, with a price target of $16. The company’s shares opened today at $15.25.

Gill commented:

“At its 2019 Analyst Day, we believe Cypress demonstrated its laser-like focus on IoT and Auto – two markets that represent the fastest growing trends in the semiconductor industry, if not all of technology. By investing in connect (wireline/wireless) and compute (MCU, touch, flash), we believe Cypress is uniquely positioned to capitalize on these growing trends while also establishing a defensible position in these markets. Moreover, we are encouraged that the company has increased its long-term target, specifically raising its gross margin target to >50% (vs. 50%), which demonstrates the underlying mix shift to higher-margin & stickier products. Based on this new model, we could see long-term earnings of $1.50-$1.75, making the stock inexpensive at current valuations.”

According to TipRanks.com, Gill is a 5-star analyst with an average return of 11.9% and a 56.9% success rate. Gill covers the Consumer Goods sector, focusing on stocks such as Sequans Communications S A, Everspin Technologies Inc, and Smart Global Holdings Inc.

Cypress Semicon has an analyst consensus of Strong Buy, with a price target consensus of $16.58, an 8.7% upside from current levels. In a report released today, MKM Partners also maintained a Buy rating on the stock with a $18 price target.

See today’s analyst top recommended stocks >>

Semtech (SMTC)

Oppenheimer analyst Rick Schafer maintained a Buy rating on Semtech today and set a price target of $60. The company’s shares opened today at $52.27.

Schafer observed:

“SMTC reported F4Q19 (Jan.) results on 3/13. Sales/EPS of $160M/$0.55 edged consensus $159M/$0.53E; however, F1Q20 (Apr.) outlook of $130M/$0.33 was well below the Street’s $156M/$0.51E and our near Street-low $150M/$0.45E. Given myriad market and cycle headwinds, the real surprise was magnitude of miss and, most important, the lowered outlook for LoRa . . . now $100M-$140M for CY19 (vs. $150M-$160M expected). DC/PON led downside, reflecting China demand softness and hyperscale spending cuts. Protection weakness stems from depressed global smartphone units. On the bright side, mgmt highlighted broadly improved bookings the last two weeks and expectations of a 2H recovery. Near-term DC/PON/Protection issues are well understood. SMTC’s flagship growth/upside driver LoRa cuts seem the biggest cause for incremental concern. Investors will monitor LoRa trends closely.”

According to TipRanks.com, Schafer is a top 100 analyst with an average return of 15.1% and a 71.0% success rate. Schafer covers the Consumer Goods sector, focusing on stocks such as Akoustis Technologies, Skyworks Solutions, and Texas Instruments.

The word on The Street in general, suggests a Moderate Buy analyst consensus rating for Semtech with a $55.88 average price target, a 6.9% upside from current levels. In a report issued on February 27, B.Riley FBR also assigned a Buy rating to the stock with a $68 price target.

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