Microchip Technology's Path To Recovery: Analyst Sees Steady Margins With Ongoing Inventory Management
Portfolio Pulse from Anusuya Lahiri
Piper Sandler analyst Harsh V. Kumar maintained a Neutral rating on Microchip Technology Inc (NASDAQ:MCHP) with a price target of $80, citing ongoing inventory management and positioning for recovery in H2. The company is focusing on inventory clearances, especially in the auto and industrial sectors, and aims for flat revenue in Q2. Despite the current downturn, MCHP plans to maintain capex and has won a $162 million grant through the CHIPS Act, positioning it well for future cycles. Kumar forecasts Q4 revenue and EPS at $1.33 billion and $0.57, respectively. MCHP stock has gained over 24% in the last 12 months and is part of the Columbia ETF Trust I Columbia Seligman Semiconductor And Technology ETF (NYSE:SEMI) and First Trust Nasdaq Semiconductor ETF (NASDAQ:FTXL).

April 29, 2024 | 3:12 pm
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POSITIVE IMPACT
First Trust Nasdaq Semiconductor ETF holds MCHP, potentially gaining from MCHP's inventory management, capex maintenance, and CHIPS Act grant win as forecasted by analysts.
FTXL, which includes MCHP in its holdings, may see a positive impact from MCHP's strategic positioning for recovery, as highlighted by the analyst's positive forecasts and the CHIPS Act grant win.
CONFIDENCE 75
IMPORTANCE 60
RELEVANCE 70
POSITIVE IMPACT
Microchip Technology is focusing on inventory management and recovery, maintaining capex, and has won a $162 million CHIPS Act grant. Analyst forecasts Q4 revenue and EPS at $1.33 billion and $0.57.
The neutral rating with a positive outlook on inventory management, capex maintenance, and the CHIPS Act grant win suggests a stable to positive short-term impact on MCHP's stock. The analyst's forecast indicates confidence in the company's financial health and strategic positioning for recovery.
CONFIDENCE 85
IMPORTANCE 90
RELEVANCE 100
POSITIVE IMPACT
Columbia ETF Trust I Columbia Seligman Semiconductor And Technology ETF includes MCHP in its portfolio, potentially benefiting from MCHP's strategic positioning and analyst forecasts.
Given MCHP's inclusion in SEMI's portfolio, the positive outlook and strategic moves by MCHP, including inventory management and the CHIPS Act grant win, could indirectly benefit SEMI's performance.
CONFIDENCE 75
IMPORTANCE 60
RELEVANCE 70