Semtech Corporation SMTC is leaving no stone unturned to bolster footprint in the booming IoT space on the back of robust Low power, high Range (LoRa) devices and the LoRaWAN protocol.
This is evident from its latest move of joining forces with the Seoul Metropolitan Government. Per the deal, the company’s LoRa technology will be leveraged to enhance Seol’s citywide network for Internet of Things (IoT) applications.
This deal is part of a larger plan by the Seol government to increase connectivity offerings and create hyper-connected cities by 2022. It also plans to create a municipal Wi-Fi network that will be accessible to everyone from anywhere within the city’s limits.
To make this plan effective, the government of Seol plans to deploy up to 1,000 LoRaWAN-based gateways by 2022. We note that LoRa aids in seamless deployment of IoT devices.
Consequently, the move is likely to boost the adoption rate of the company’s LoRa technology, which in turn will drive the top line.
Semtech Corporation Price and Consensus
Market Opportunities to Aid Growth
The latest deal will strengthen Semtech’s presence in the booming smart city space on the back of growing proliferation of computing technologies, Internet usage, smart home devices and IoT devices.
Per a report from Grand View Research, Inc., the global smart cities market is expected to witness a CAGR of 18.9% over the period of 2019 and 2025,and reach $237.6 billion by 2025.
Further, a MarketsandMarkets report indicates that the global smart cities market is expected to witness a CAGR of 18.4% over the period of 2018 and 2023,and reach $717.2 billion by 2023.
Rapid urbanization, aging infrastructure, adoption of new technology and the need for improved quality of life are driving growth of this industry.
With the help of the Seol deal and LoRa technology, Semtech is likely to reap benefits from the potential growth of the smart cities market. This will aid the momentum of the company’s LoRa-based solutions in this space.
LoRa Technology: Key Catalyst
Semtech is witnessing growing strategic alliance and contracts, thanks to cost-efficient abilities of the LoRa technology in creating and deploying IoT solutions.
We believe Semtech is well poised to rapidly penetrate into the expanding IoT market with the aid of 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. Moreover, seasonality in the consumer segment remains a woe and might hamper its top line.
Zacks Rank & Stocks to Consider
Semtech currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include MACOM Technology Solutions Holdings, Inc. (
MTSI Quick Quote MTSI - Free Report) , Itron, Inc. ITRI and Fiverr International Ltd. FVRR, 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 MACOM Technology, Itron and Fiverr is currently projected at 15%, 25% and 44.2%, respectively.
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