Microchip Technology Reports Strong Q2 Earnings Amid Analyst Revisions

Microchip Technology Incorporated (MCHP) announced encouraging earnings results for its second quarter this past Tuesday.

The company reported earnings of 46 cents per share for the quarter, surpassing the analyst consensus estimate of 43 cents per share. Additionally, Microchip's quarterly sales amounted to $1.164 billion, which also exceeded the analyst consensus estimate of $1.152 billion.

Ganesh Moorthy, the President and Chief Executive Officer, commented on the results, stating, "Our September quarter results were consistent with our guidance, as we continued to navigate through an inventory correction that’s occurring in the midst of macro weakness for many manufacturing businesses, accentuated by heightened weakness in our European business which is concentrated with industrial and automotive customers. The ‘green shoots’ we saw in recent quarters have progressed unevenly with essentially flat sequential bookings, normalized cancellation rates, and much higher expedite requests, which we believe are all positive signs for a potential bottom formation despite limited visibility."

Looking ahead, Microchip anticipates adjusted earnings for the third quarter in the range of 29 cents to 32 cents per share, with net sales predictions between $1.025 billion and $1.095 billion.

Despite the positive earnings report, shares of Microchip fell by 1.8% to $73.76 on Wednesday.

Following the earnings announcement, several analysts adjusted their price targets for Microchip Technology:

• Needham analyst Quinn Bolton has maintained a Buy rating but has lowered the price target from $96 to $85.
• Piper Sandler analyst Harsh Kumar kept the stock rated as Overweight but reduced the price target from $100 to $85.
• Keybanc analyst Weston Twigg maintained an Overweight rating while lowering the price target from $100 to $95.
• Susquehanna analyst Christopher Rolland reiterated a Positive rating, cutting the price target from $95 to $90.
• Evercore ISI Group analyst Mark Lipacis reaffirmed an Outperform rating with a reduction in the price target from $101 to $95.
• TD Cowen analyst Joshua Buchalter maintained a Hold rating while adjusting the price target down from $80 to $70.
• Jefferies analyst Blayne Curtis retained a Buy rating, decreasing the price target from $100 to $90.
• Citigroup analyst Christopher Danely also maintained a Buy rating but slashed the price target from $92 to $82.

Considering purchasing MCHP stock? Here’s what analysts think:

Microchip Technology’s recent performance highlights its position in a challenging market environment. Investors should consider this information as they make decisions regarding their portfolios.

Microchip, Earnings, Stocks