Microchip Technology stock price target maintained at $70 by Cantor Fitzgerald

Investing.com - Cantor Fitzgerald has reiterated its Neutral rating on Microchip Technology (NASDAQ:MCHP) with a price target of $70.00, according to a research note published Tuesday. According to InvestingPro data, the stock appears overvalued at current levels, with 9 analysts recently revising their earnings expectations upward for the upcoming period.

The firm noted that Microchip experienced the most severe gross margin compression during the recent industry downturn, despite having seen expansion roughly in line with competitors Analog Devices (NASDAQ:ADI), Texas Instruments (NASDAQ:TXN), and NXP Semiconductors (NASDAQ:NXPI) during the COVID period.

Cantor Fitzgerald expects Microchip’s gross margins to improve in the second half of the year as underutilization and inventory reserve charges begin to decline, potentially creating "a path to 60%+ faster than most anticipate."

The research firm believes this gross margin expansion could occur approximately two quarters ahead of consensus expectations, positioning the company favorably compared to market forecasts.

With its significant gross margin expansion potential and preferential exposure to the industrial sector, Cantor Fitzgerald views Microchip Technology as "positioned to continue being a beneficiary of the cycle trade."

In other recent news, Microchip Technology Inc . has made significant advancements in its product offerings and received attention from several analyst firms. The company has enhanced its TrustMANAGER platform with Firmware Over-the-Air capabilities to comply with evolving cybersecurity regulations in the European Union. Additionally, Microchip launched two new Digital Signal Controller families aimed at improving energy efficiency in AI servers and other embedded applications. The controllers are designed with high-resolution features and comply with safety standards, targeting automotive and industrial sectors.

Truist Securities has raised its price target for Microchip Technology to $64, reflecting an optimistic outlook on the company’s recovering sales and margins. Meanwhile, Cantor Fitzgerald initiated coverage with a neutral rating and a $70 price target, citing potential for gross margin expansion. JPMorgan has maintained an Overweight rating with a $70 price target, noting the company’s improved bookings and revenue growth. Despite facing gross margin headwinds, Microchip anticipates above-average growth in sectors like aerospace and defense, driven by strong spending trends.

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