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With a market cap of $29.2 billion, Microchip Technology Incorporated (MCHP) is a global leader in embedded control solutions, offering advanced microcontrollers, analog, and memory products. The company develops cutting-edge 8-bit, 16-bit, and 32-bit microcontrollers, digital signal controllers, and a diverse range of analog and interface solutions for industries such as automotive, industrial, and communications.
Shares of the semiconductor manufacturer have significantly underperformed the broader market over the past 52 weeks. MCHP stock has dropped 38% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 20.9%. On a YTD basis, shares of MCHP are down 8.9%, compared to SPX's 1.9% gain.
In addition, the Chandler, Arizona-based company has also lagged behind the Technology Select Sector SPDR Fund's (XLK) 12.6% return over the past 52 weeks and a 2.1% YTD dip.
Despite reporting better-than-expected Q2 2025 adjusted EPS of $0.46 and net sales of $1.2 billion on Nov. 5, MCHP shares fell 1.8% the next day due to a steep 71.6% year-over-year EPS decline and a 48.4% drop in sales. The company's Q2 results reflected ongoing customer destocking and weak demand in key markets like automotive and consumer, raising concerns. Its Q3 guidance projected net sales of $1 billion - $1.1 billion and adjusted EPS of $0.25 - $0.35, falling short of investor expectations.
For the current fiscal year, ending in March 2025, analysts expect MCHP's EPS to dip 71.5% year-over-year to $1.31. However, the company's earnings surprise history is promising. It beat the consensus estimates in the last four quarters.
Among the 22 analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on 15 “Strong Buy” ratings, one “Moderate Buy,” five “Holds,” and one “Moderate Sell.”
On Dec. 4, 2024, Stifel lowered its price target on Microchip to $87 while maintaining a “Buy" rating, citing revised fiscal Q3 revenue guidance due to lower-than-expected turn orders.
As of writing, MCHP is trading below the mean price target of $80.32. The Street-high price target of $95 implies a potential upside of 81.8% from the current price levels.
