Microchip Technology (MCHP) PT Raised to $82 at Stifel

Stifel analyst Tore Svanberg raised the price target on Microchip Technology (NASDAQ: MCHP) to $82.00 (from $76.00) while maintaining a Hold rating. The analyst highlighted:

• Solid Sep Q beat (rev +0.7%/NG EPS +$0.02 vs. Street) and raised Dec Q outlook (+6.0% q/q), while NG GMs guided to 66.0% (+70bps q/q).
• Backed by strong near-term visibility, based on (1) record level backlog; (2) adequate capacity to support rev. growth over next 4 Q’s (including the Dec Q); and (3) PSP ~50% of backlog for non-cancellable orders;
• Nevertheless, strength potentially peaking in the near-term, based on +29.4% y/y growth outlook in the Dec Q (following +26.0% y/y in Sep Q), which would imply +10% q/q in Mar (vs. +1.6% q/q based on 5-year typical seasonality) to sustain accelerated y/y growth;
• Thus, given our concerns about a “lead-time correction” in the overall semiconductor industry, coupled with MCHP’s FCF yield of 4.17% and dividend yield of 1.12%, we believe the Sep Q beat and raise remains priced-in and therefore maintain our Hold rating at this time.

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