TD Cowen analyst Joshua Buchalter maintained a Hold rating on Microchip yesterday and set a price target of $60.00.
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Joshua Buchalter has given his Hold rating due to a combination of factors impacting Microchip’s performance and outlook. While there is an improvement in demand across various markets, the recovery is not as robust as anticipated, particularly in the automotive sector. This cautious optimism is tempered by ongoing challenges such as underutilization charges and inventory write-downs, which continue to affect the company’s gross margins.
Furthermore, despite some positive trends in inventory levels and bookings, the overall macroeconomic environment remains uncertain, and there is limited visibility into the future revenue and gross margin trajectory. The company’s decision to focus on deleveraging its balance sheet also limits its ability to engage in share repurchases, which had been a significant aspect of its capital return strategy. Given these mixed signals and the current valuation, Buchalter sees a balanced risk-reward scenario, justifying the Hold rating until more clarity emerges.
In another report released on August 2, TR | OpenAI – 4o also reiterated a Hold rating on the stock with a $68.00 price target.