Microchip Technology Faces Stock Struggles Amid Mixed Earnings Report
Microchip Technology Incorporated (MCHP), based in Chandler, Arizona, focuses on designing, manufacturing, and selling smart embedded control solutions. With a market cap of $40 billion, it operates in the Americas, Europe, and Asia.
Stock Performance Falls Short of Expectations
Over the past year, MCHP has significantly underperformed compared to the broader market. Its stock has fallen 1.8% in the past 52 weeks, while the S&P 500 Index ($SPX) has surged by 32.7%. In 2024 alone, MCHP stock decreased by 16.7%, while the S&P 500 saw a YTD increase of 21.2%.
Additionally, MCHP trailed the First Trust Nasdaq Semiconductor ETF’s (FTXL) returns of 33.8% over the same period and 10.3% in 2024.
Recent Earnings Results and Future Projections
On Nov. 5, MCHP announced its fiscal 2025 second-quarter earnings, which resulted in a slight rise in stock prices. The company reported an adjusted EPS of 46 cents per share, beating analysts’ expectations of 43 cents. With revenue of $1.16 billion, it edged past the forecasted $1.15 billion.
Looking ahead, MCHP anticipates earnings of 25 to 35 cents per share and revenues between $1.02 billion and $1.1 billion for the current quarter.
For the fiscal year ending in March 2025, analysts predict a significant EPS decline of 62.4% to $1.73. The company has had a mixed performance history, beating or matching estimates in three of the last four quarters, but missing forecasts once.
Analyst Ratings Show Cautious Optimism
Despite the challenges, the consensus among the 22 analysts covering MCHP stock is a “Strong Buy,” a notable increase from a “Moderate Buy” three months ago. This is based on 15 “Strong Buy” ratings, one “Moderate Buy,” and six “Holds.”
Two months prior, 16 analysts had recommended a “Strong Buy,” indicating a slight dip in bullish sentiment.
On Oct. 21, Susquehanna Community Financial, Inc. (SQCF) updated its price target for MCHP, lowering it from $105 to $95 but keeping a “Positive” rating. They noted challenges expected in the automotive and industrial sectors as growth slowed in late summer.
Currently, MCHP has a mean price target of $93.32, which suggests a potential upside of 24.3% from its current price. The highest target of $110 points to a possible 46.5% gain.
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On the date of publication, Kritika Sarmah did not hold (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data herein are for informational purposes only. For further details, please see the Barchart Disclosure Policy here.
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