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Research Alert: CFRA Maintains Hold Opinion On Shares Of Microchip Technology

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CFRA, an independent research provider, has providedwith the following research alert. Analysts at CFRA have summarized their opinion as follows:

We increase our 12-month target price to $110 from $82, on a P/E of 29.5x our CY 27 EPS estimate of $3.72, near peers but within historical levels. We raise our FY 27 (Mar.) EPS estimate to $2.98 from $2.72 and FY 28's to $3.97 from $3.65. After a solid beat and raise that mirrored many of its peers, MCHP noted that Mar-Q book-to-bill was well above 1. This has resulted in a significantly higher backlog entering the Jun-Q while April marks the strongest booking month in nearly four years. Distributor inventory fell to just 26 days at Mar-Q end, at the lower end of historical levels, as we think the business has moved to a broad-based recovery, with notable strength across industrial, data center, and aerospace & defense. MCHP appears well-positioned to gain share as it holds prices steady while competitors reportedly increase theirs. Gross margin expansion has more room to go, now in the low-60s with the potential to expand toward prior peak levels (high 60s), as factory utilization rates improve.

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