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On Friday, Truist Securities adjusted its stance on Microchip Technology shares (NASDAQ:MCHP), reducing the price target from the previous $68.00 to $56.00, while maintaining a Hold rating on the stock. The adjustment follows Microchip Technology’s recent performance, which included missing earnings expectations and providing guidance that fell short of analyst projections. According to InvestingPro data, the stock is currently trading near its 52-week low of $51.37, with analyst targets ranging from $50 to $95.
Truist Securities expressed caution regarding the immediate future of Microchip Technology. The company’s latest financial results have prompted it to undertake a comprehensive review of its operations. InvestingPro analysis reveals the company’s overall financial health score is FAIR, with revenue expected to decline by 41% this year. Scheduled for March 3, 2025, the review will focus on a 9-point plan aimed at assessing and improving the business.
The analyst from Truist Securities highlighted the challenges faced by Microchip Technology, particularly in relation to its customer relationships, which may have been impacted during the previous up-cycle. The firm’s analysts suggest that potential value investors should seek further clarity on the company’s position within the business cycle and the status of its customer relationships before making investment decisions. InvestingPro subscribers can access detailed valuation metrics, including P/E ratio of 35.4x and comprehensive financial health analysis in the Pro Research Report, helping investors make more informed decisions.
In addition to the price target reduction, Truist Securities has revised its earnings per share (EPS) forecast for the company for the fiscal year 2026. The firm now expects Microchip Technology to post an EPS of $2.80, a decrease from the previously estimated $3.56.
The analyst’s commentary reflects a degree of uncertainty surrounding Microchip Technology’s outlook. Truist Securities advises investors to remain on the sidelines for the time being, indicating a cautious approach until more information becomes available regarding the company’s strategic review and its implications for the business.
In other recent news, Microchip Technology has seen a series of adjustments to its stock target by various analyst firms. Piper Sandler reduced the price target for Microchip Technology to $65, citing concerns over excess inventory and a subdued demand environment in the company’s primary markets. Needham also cut its stock target to $60, following the company’s recent financial report and guidance for the fiscal fourth quarter that fell short of market expectations. Mizuho (NYSE:MFG) Securities and Citi followed suit, lowering their targets to $58 and $65 respectively, while maintaining positive ratings on the stock.
In addition to these revisions, Microchip Technology announced an increase in its quarterly dividend to 45.5 cents per share. This move is seen as a continuation of the company’s trend of increasing dividends since the third quarter of fiscal year 2003.
These recent developments come amidst a challenging period for the semiconductor industry, with Microchip Technology and other players grappling with inventory and demand issues. Despite these challenges, the analysts at Piper Sandler, Needham, Mizuho, and Citi expressed confidence in the company’s potential for growth once market conditions improve.
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