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Truist Securities raised its price target on Microchip Technology (NASDAQ:MCHP) stock to $64.00 from $52.00 on Wednesday, while maintaining its Hold rating on the semiconductor company. According to InvestingPro data, analysts’ targets for MCHP currently range from $50 to $85, with the stock trading at $68.62.
The price target increase reflects Truist’s updated outlook for Microchip’s recovering sales and margins, following the company’s calendar second-quarter guidance update on May 29, 2025, and recent discussions with management about gross profit margin trajectory. The company’s gross profit margin stands at 56.07%, with InvestingPro analysis showing 9 analysts having revised their earnings estimates upward for the upcoming period.
Truist cited feedback from industry contacts, including component buyers and sellers, who have recently become "somewhat more constructive" about the semiconductor sector’s prospects.
The firm’s revised model anticipates a faster gross profit margin recovery for Microchip, leading to an adjusted calendar year 2026 earnings per share estimate of $2.66, up from its previous projection of $2.59.
Truist’s new $64 price target is based on a price-to-earnings multiple of 24x, which the firm considers "peer-equivalent" and "appropriate for this (early recovery) part of the cycle."
In other recent news, Microchip Technology reported several significant developments that may interest investors. The company announced the launch of two new Digital Signal Controller families aimed at enhancing energy efficiency in AI servers and other applications. These controllers are designed with advanced features like high-resolution Pulse Width Modulations and low-latency ADCs, aligning with industry standards for automotive and industrial use. Additionally, JPMorgan maintained its Overweight rating on Microchip Technology, citing strong cyclical recovery trends and increased bookings, which have reached their highest level in two years. Despite facing gross margin challenges due to inventory write-downs, JPMorgan analysts anticipate that improvements in bookings and revenue could alleviate these pressures.
Evercore ISI also reaffirmed its Outperform rating, highlighting potential margin expansion and Microchip’s competitive positioning in the U.S. and China. The firm projects earnings per share estimates for 2025 and 2026 to be significantly above consensus. Meanwhile, UBS raised its price target for Microchip Technology from $60 to $65, maintaining a Buy rating. UBS expects the company to benefit from channel normalization and industrial sector recovery, although this is balanced by anticipated increases in operating expenses. Cantor Fitzgerald initiated coverage with a neutral rating, acknowledging Microchip’s efforts to improve business operations and its exposure to the industrial sector. These developments reflect a mix of optimism and caution among analysts regarding Microchip Technology’s future performance.
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