What happened

Shares of MACOM Technology Solutions Holdings Inc. (NASDAQ:MTSI) fell 11.8% on Wednesday after Stifel analyst Tore Svanberg downgraded his rating on the semiconductor device and component specialist.

More specifically, Svanberg lowered his recommendation to sell from hold, and reduced his per-share price target on MACOM stock to $20 from $22. Shares closed today at $19.38.

Stock data and red arrow chart indicating losses


So what

To be fair, MACOM wasn't the subject of Svanberg's ire; he simultaneously downgraded several other names in the semiconductor space, including NXP (down less than 1% today), Maxim Integrated Products (down 4%), and Power Integrations (down 6%). Each endured their own declines today, albeit none as severe as MACOM's -- a likely consequence of MACOM's more than 30% pop since its encouraging fiscal second-quarter report in early May.

To justify his bearish calls, Svanberg argued that after two straight years of strong growth, the analog and mixed-signal semiconductor market is increasingly showing signs that it may have peaked. What's more, customer inventory building ahead of proposed tariffs has resulted in lower visibility into near-term growth.

Now what

Svanberg added that MACOM, in particular, could struggle given its higher debt load relative to peers in its space, especially if interest rates continue to rise.

In the meantime, you can be sure investors will be watching these trends closely, with MACOM's next quarterly report slated for mid-November. For perspective, the company's guidance calls for quarterly revenue ranging from $149 million to $155 million, or a roughly 8.6% year-over-year decline, and adjusted earnings per share of between $0.15 and $0.17.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.