US LNG exports surge but will buyers in China turn up?
Investing.com - Susquehanna lowered its price target on Microchip Technology (NASDAQ:MCHP) to $85 from $90 while maintaining a Positive rating, citing macro uncertainty despite signs of recovery. The semiconductor company, currently trading at $66.22 with a market cap of $35.7 billion, maintains a strong dividend track record with 24 consecutive years of payments. According to InvestingPro analysis, the stock appears overvalued at current levels, though analysts maintain a bullish consensus.
The firm noted that Microchip announced better results with in-line guidance as the business recovers strongly from its first-quarter bottom. The company experienced a clear pickup in demand with nearly all key performance indicators showing meaningful improvements, and both direct and distribution sales increased sequentially for the first time in two years. Despite recent revenue challenges, with a 42.3% year-over-year decline, InvestingPro data shows analysts expect revenue growth to resume in fiscal year 2026.
Lead times are beginning to stretch for some products, a trend management expects to continue. The company believes this upturn represents a structural demand recovery rather than just a tariff-related pull-forward, with only a mid-to-high single-digit million impact from order acceleration in Asia.
Microchip made better-than-expected progress on its internal inventory reduction initiative, decreasing inventory to 214 days when the company had anticipated 215-225 days. Both inventory write-off and underutilization charges decreased quarter-over-quarter and were guided to decrease further in the September quarter.
Gross margins improved for June as the adverse impact from inventory write-offs and underutilization charges narrowed to a 12-percentage-point impact, with management expecting super-seasonal trends through the rest of fiscal year 2026.
In other recent news, Microchip Technology reported its first-quarter fiscal year 2026 earnings, surpassing expectations with an earnings per share (EPS) of $0.27, compared to the forecasted $0.24. The company’s revenue reached $1.08 billion, exceeding the anticipated $1.05 billion. Despite these positive earnings results, some analysts adjusted their outlook on the stock. TD Cowen lowered its price target to $60 from $75, maintaining a Hold rating, citing that the financial results, while a beat, likely disappointed some investors expecting a stronger recovery. On the other hand, Needham raised its price target to $77 from $66, maintaining a Buy rating, attributing the increase to improving demand in the semiconductor sector. Morgan Stanley (NYSE:MS) also raised its price target slightly to $63 from $61, noting Microchip’s strong quarter-over-quarter revenue growth, though September guidance was in line with expectations. These developments reflect varied analyst perspectives on Microchip Technology amidst its recent financial performance.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.