Microchip Technology (MCHP) PT Raised to $110 at Needham & Company

Needham & Company analyst Rajvindra Gill raised the price target on Microchip Technology (NASDAQ: MCHP) to $110.00 (from $82.00) while maintaining a Buy rating.

The analyst commented, "Microchip delivered a solid print; all metrics were slightly above our and the Street expectations. Importantly, the company is confident that F1Q24 (Jun) will increase sequentially (similar to last quarter). Backlogs, lead times and orders have begun to crack, yet the gross margin remains close to record levels. ASP growth continues to be a key investor concern; we expect ASPs to trend higher but not at the same rate as 2022 (similar commentary from NXPI).

MCHP results continue to impress, and we are more confident the company can navigate a soft landing. We are modeling slight sequential revenue declines in C2H23 with margins holding steady (at the high end of the industry) throughout.

Our price target moves from $82 to $110, based on a 50/50 blend of 16.5x our new FY25 EPS estimate of $6.25 and 16.4x our FY25 EBITDA estimate of $4.33BN."

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