SMTC
Semtech Corporation
$156.78
Platform & Compounding FCF
80%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 208.9% above fair value
You pay
$156.78
Bear
$33.88
Fair
$50.75
Bull
$68.13
Bear
$33.88
-78.4%
7% stage 1 growth, 12% discount
Fair
$50.75
-67.6%
12% stage 1 growth, 12% discount
Bull
$68.13
-56.5%
16% stage 1 growth, 12% discount
Key Value Driver
FCF growth rate (12% base case)
Terminal Value % of EV
36%
Implied Market Multiple
127.9x
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $112.90 from 32 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $50.75 per share.
Warnings
Wall Street's average price target is $112.90 (from 32 analysts). Our estimate is 79% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions