Citi reiterates Buy rating on Microchip Technology stock with $90 target

Investing.com - Citi has reiterated its Buy rating on Microchip Technology (NASDAQ:MCHP) stock with a price target of $90.00, according to a recent research note. The semiconductor company, currently trading at $74.30 with a market capitalization of $40.1 billion, shows a beta of 1.51, indicating higher volatility than the broader market.

The firm believes Microchip Technology is currently under-owned among investors but expects sentiment to change following the company’s upcoming earnings report, scheduled for August 5. According to InvestingPro data, net income is expected to grow this year, supporting Citi’s view that MCHP has the most upside potential to consensus estimates among stocks in its coverage universe.

Citi’s earnings per share estimate for calendar year 2026 stands 38% above the current consensus, highlighting the firm’s bullish outlook on the semiconductor company’s future performance. With a strong current ratio of 2.59, MCHP maintains solid financial health, though InvestingPro analysis suggests the stock may be overvalued at current levels. Discover 10+ additional exclusive insights available on InvestingPro.

The research note indicates that after recent client meetings, Citi found Microchip Technology to be less popular among investors compared to ON Semiconductor (NASDAQ:ON), which has become a favored long position. Based on this positioning, Citi expects MCHP shares to trade higher while ON may trade lower.

Citi also shared broader semiconductor sector observations, noting that Intel (NASDAQ:INTC) remains a popular short position, while expecting Micron (NASDAQ:MU) stock weakness due to DRAM price flattening and AMD (NASDAQ:AMD) to trade higher before earnings driven by AI strength.

In other recent news, Microchip Technology announced a partnership with Delta Electronics to collaborate on silicon carbide (SiC) power solutions, aiming to advance technologies for artificial intelligence and electrification applications. This agreement will see Delta Electronics incorporating Microchip’s mSiC products into its designs, focusing on energy-saving systems. Additionally, Microchip has achieved military qualifications for its radiation-tolerant FPGAs, marking significant progress for its space-focused semiconductor products. The company has also made engineering samples available for its RT PolarFire System-on-Chip FPGA, which integrates a RISC-V-based microprocessor subsystem.

In a notable development, Citi has reiterated Microchip as its top semiconductor pick, citing expectations for the highest earnings per share growth among its peers. Goldman Sachs has initiated coverage on Microchip with a Buy rating, expressing confidence in the company’s growth potential as the microcontroller market recovers. The return of Steve Sanghi as the permanent CEO of Microchip Technology was also announced, with Sanghi expected to continue leading the company through its recovery plan. The board expressed confidence in Sanghi’s leadership to restore Microchip’s industry position.

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