Microchip’s Strategic Growth and Market Positioning Drive Buy Rating and $70 Price Target

J.P. Morgan analyst Harlan Sur maintained a Buy rating on Microchip (MCHP – Research Report) today and set a price target of $70.00.

Harlan Sur has given his Buy rating due to a combination of factors including Microchip’s ongoing cyclical recovery and strategic focus on growth areas. The company has reported strong bookings and order strength, with the highest bookings in two years and improving backlog, indicating potential upside in gross margins, operating margins, and earnings per share as the year progresses. Additionally, Microchip’s focus on megatrends such as cloud and AI datacenter spending, along with its strong portfolio in networking and connectivity products, positions it well for sustained growth.
Moreover, the merger with Microsemi has significantly enhanced Microchip’s market share and product portfolio, allowing it to gain further traction in a fragmented market. The management’s execution of a 9-point recovery plan and effective rightsizing of its manufacturing footprint are expected to drive additional revenue synergies. The company’s strength in distribution and customer support further supports its growth outlook, leading to an Overweight rating with a price target of $70, reflecting a valuation in line with its peer group.

In another report released on June 1, Evercore ISI also reiterated a Buy rating on the stock with a $69.00 price target.