SMTC
Semtech Corporation
$136.13
Platform & Compounding FCF
80%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 73.4% above fair value
You pay
$136.13
Bear
$51.92
Fair
$78.51
Bull
$106.05
Bear
$51.92
-61.9%
7% stage 1 growth, 12% discount
Fair
$78.51
-42.3%
12% stage 1 growth, 12% discount
Bull
$106.05
-22.1%
16% stage 1 growth, 12% discount
Key Value Driver
FCF growth rate (12% base case)
Terminal Value % of EV
36%
Implied Market Multiple
111.5x
Market is pricing in (growth)
34.3%
vs 12.3% base
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 $204.36 from 32 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $78.51 per share.
Warnings
Wall Street's average price target is $204.36 (from 32 analysts). Our estimate is 88% 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