/Microchip%20Technology%2C%20Inc_%20HQ%20sign-by%20Michael%20Vi%20via%20Shutterstock.jpg)
Arizona-based Microchip Technology Incorporated (MCHP) develops, manufactures, and sells smart, connected, and secure embedded control solutions for automotive, industrial, computing, communications, lighting, power supplies, motor control, human-machine interface, security, wired connectivity, and wireless connectivity applications. Valued at a market cap of $30 billion, the company is expected to release its fiscal Q3 earnings results on Thursday, Feb. 6.
Prior to this event, analysts projected the tech company to report a profit of $0.22 per share, down by a massive 78.2% from $1.01 per share in the year-ago quarter. The company has met or beaten Wall Street's bottom-line estimates in each of the last four quarters. Its adjusted EPS of $0.46 per share in the previous quarter outpaced the consensus estimates by 7%.
For fiscal 2025, analysts expect MCHP to report an EPS of $1.32, down by a huge margin of 71.3% from $4.60 in fiscal 2024. Nonetheless, in fiscal 2026, EPS is expected to grow 56.1% year-over-year to $2.06.
Shares of Microchip Technology have declined 33.4% over the past 52 weeks, significantly lagging behind both the S&P 500 Index's ($SPX) 22.1% rise and the Technology Select Sector SPDR Fund’s (XLK) 18.5% return over the same time frame.
Shares of MCHP plunged 1.8% following its Q2 earnings release on Nov. 5, despite delivering better-than-expected Q2 revenues of $1.2 billion and adjusted EPS of $0.46. However, the top and bottom-line figures significantly declined from the year-ago quarter. Adjusted earnings decreased 71.6%, while revenues fell 48.4%. A massive revenue decline in its industrial and automotive sectors, especially in Europe, and high inventory reserve charges primarily led to its steep revenue and EPS fall. This might have lowered investor confidence.
Despite facing significant challenges, the company remained optimistic about recovery and is focused on strategically managing its inventory and operating expenses.
Wall Street analysts are moderately optimistic about Microchip Technology’s stock, with a "Moderate Buy" rating overall. Among 22 analysts covering the stock, 15 recommend "Strong Buy," one suggests a “Moderate Buy,” five indicate “Hold,” and one suggests a “Moderate Sell.”
The average price target for MCHP is $82.68, which indicates a massive 45.7% potential upside from the current levels.
