Analyst Christopher Danely of Citi reiterated a Buy rating on Microchip (MCHP – Research Report), with a price target of $100.00.
Christopher Danely has given his Buy rating due to a combination of factors that suggest a favorable outlook for Microchip Technology Inc. Despite a downward revision in its fiscal third-quarter 2024 revenue guidance, Danely observes that the rate of decline is decelerating, indicating that the worst of the downturn may be nearing its end. This perspective is bolstered by the expectation that all companies in the analog sector, including competitors like NXP Semiconductors, are likely to go through a similar correction phase. Danely’s confidence in Microchip is further supported by the belief that the company’s stock is poised for recovery, especially when considering that the factors previously contributing to its undervaluation — such as high debt levels, a low tax rate, and a conglomerate discount — are diminishing.
Moreover, the analysis points to a smaller expected decline in the March quarter sales compared to the December quarter, indicating a more stable period ahead. The assessment also includes a comparative view of the industry, noting that Microchip’s forecasted peak-to-trough sales decline is consistent with peers, suggesting a broader market trend rather than a company-specific issue. In light of these factors, and coupled with lowered revenue and EPS estimates that align more realistically with current guidance, Danely maintains a Buy rating on MCHP shares. This is reflective of a strategic outlook that sees the current situation as an opportunity to invest in Microchip, anticipating a potential return of 16.8% as the company navigates through market corrections and begins to address the factors that led to its previous undervaluation.
In another report released today, KeyBanc also assigned a Buy rating to the stock with a $90.00 price target.
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Based on the recent corporate insider activity of 54 insiders, corporate insider sentiment is positive on the stock. This means that over the past quarter there has been an increase of insiders buying their shares of MCHP in relation to earlier this year.
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Microchip (MCHP) Company Description:
Founded in 1989, Arizona-based Microchip Technology, Inc. is a leading provider of smart, connected and secure embedded control solutions. The company’s solutions serve more than 120,000 customers across the industrial, automotive, consumer, aerospace and defense, communications and computing markets.
Read More on MCHP:
- Microchip Stock (MASDAQ:MCHP) Slips on Weak Q3 Sales Outlook
- Microchip Technology Provides Preliminary Fiscal Third Quarter Revenue Results and Announces Earnings Release Date
- Lawmakers push to stop China’s dominance of older-gen microchips, WSJ says
- Microchip price target raised to $97 from $83 at Truist
- Microchip price target raised to $86 from $79 at Mizuho
