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Semtech Inks Birdz Deal, Boosts Presence in Smart Meter Space

Zacks Equity Research

Semtech Corporation SMTC recently announced that the company’s Low power, high Range (LoRa) devices and wireless radio frequency technology will be used by Birdz for its smart meters.

The LoRa Technology enables long-range connectivity of Internet of Things (IoT) devices and aids in connecting sensors to the cloud. Its long range performance and low power consumption requirement enhance the overall performance of smart meters. Moreover, this technology helps in real-time communication of data and analytics to enhance efficiency as well as productivity.

Notably, LoRa aids in seamless deployment of IoT devices.

Consequently, the move is likely to boost the adoption rate of the company’s LoRa technology in the smart meters market, which in turn will drive the top line.

Market Opportunities to Aid Growth

This deal will strengthen Semtech’s presence in the smart meters market on the back of growing proliferation of computing technologies, Internet usage, and smart home and IoT devices.

Per a report from MarketsandMarkets, the global smart meters market is expected to witness a CAGR of 9.34% in the 2017-2022 period.

The latest deal will help Semtech to reap benefits from potential growth in the smart meters market.

This will aid in momentum of the company’s LoRa-based solutions in this space.

LoRa Technology: A Key Catalyst

Semtech is witnessing growing strategic alliance and contracts, thanks to cost-efficient abilities of LoRa technology in creating and deploying IoT solutions.

Apart from the current deal, the company recently joined forces with Continental Automated Buildings Association (CABA) to enhance and innovate the latter’s portfolio of smart home and building technologies.

Additionally, per a deal between Ineo-Sense and Lauak Group, the former will provide LoRa-enabled asset tracking sensors that will be integrated into the latter’s manufacturing containers.

Further, it has been selected to be used in Brazil’s network, which is based on the LoRaWAN protocol, deployed by American Tower (ATC). Moreover, Lemonbeat has adopted LoRa technology to enhance smart metering solutions.

We believe Semtech is well poised to rapidly penetrate into the expanding IoT market, aided by the highly popular LoRa technology. According to a report from Global Data, the market is expected to reach $318 billion by 2023 at a CAGR of 20% between 2018 and 2023.

However, Semtech continues to be affected by mounting competition in the semiconductor space, including sluggish demand in China. The resultant pricing pressure could dampen the company’s margins and profitability. Seasonality in the consumer segment remains a woe and might hamper its top line.

Semtech Corporation Price and Consensus

 

Semtech Corporation Price and Consensus

Semtech Corporation price-consensus-chart | Semtech Corporation Quote

Zacks Rank & Stocks to Consider

Currently, Semtech carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include Facebook, Inc. FB, IAC/InterActiveCorp IAC and AXT, Inc. AXTI, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth for Facebook, IAC/InterActiveCorp and AXT is currently projected at 20.2%, 20.5% and 15%, respectively.

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