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Investing.com - Needham raised its price target on Microchip Technology (NASDAQ:MCHP) to $75.00 from $73.00 on Thursday, while maintaining a Buy rating on the semiconductor company’s stock. The new target sits below the analyst high target of $88 but represents upside from the current price of $63.61, which has surged 21% in the past week. According to InvestingPro data, the stock appears overvalued compared to its Fair Value.
The price target adjustment follows Microchip’s announcement that its fiscal third-quarter 2026 revenue and earnings per share would come in at the high end of its previous guidance. The company now expects December quarter revenue to grow approximately 1% sequentially, with earnings per share reaching $0.40. While Microchip wasn’t profitable over the last twelve months, InvestingPro data shows analysts expect the company to return to profitability this fiscal year.
Needham cited improved bookings and backlog as key drivers of the upside, noting that orders are being pulled in from March to December. Despite these pull-ins, the firm reported that March backlog is stronger than it was a month ago, with November bookings reaching a three-year high.
Demand remains robust in aerospace and defense and data center segments, while communications, automotive, and industrial demand has recently strengthened, according to the research note. Demand outlook for 2026 is also looking strong.
The firm expects inventory charges to normalize by fiscal first-quarter 2027 (June), while underutilization charges will persist longer. Gross margins should exceed 60% in fiscal fourth-quarter 2026 (March), Needham added.
In other recent news, Microchip Technology has raised its guidance for the third quarter of fiscal 2026, now anticipating net sales of approximately $1.149 billion. This represents a 12% increase year-over-year and reflects stronger-than-expected bookings and a growing backlog. Truist Securities has maintained its Hold rating on Microchip Technology, with a price target of $60, following the company’s positive preliminary fourth-quarter results. Meanwhile, Stifel has reaffirmed its Buy rating, setting a price target of $75, citing positive booking activity through November. KeyBanc also reiterated an Overweight rating, with an $85 price target, after Microchip announced a revenue expectation of $1.15 billion for the fiscal third quarter. In product developments, Microchip introduced two new low-power digital power monitors, the PAC1711 and PAC1811, which offer real-time alerts for power events and consume half the power of comparable solutions. These recent developments highlight Microchip Technology’s ongoing efforts to enhance its financial performance and product offerings.
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