Microchip (MCHP – Research Report), the Technology sector company, was revisited by a Wall Street analyst today. Analyst Christopher Rolland from Susquehanna reiterated a Buy rating on the stock and has a $60.00 price target.
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Christopher Rolland has given his Buy rating due to a combination of factors that indicate a positive outlook for Microchip. The company has reported generally in-line results with better guidance, suggesting that the current downcycle may have reached its lowest point. Management’s confidence is bolstered by an improvement in demand, as evidenced by a book-to-bill ratio above 1 for the first time in nearly three years and a higher backlog for September compared to the June quarter.
Additionally, Microchip’s efforts to reduce inventory have shown progress, with a notable decrease in days of inventory and expectations for further reductions. Despite some challenges with microcontrollers and regional performance, the company’s distribution inventory is normalizing, and gross margins are expected to improve. Operating margins are also projected to rise, indicating potential operating leverage as revenue increases. These factors contribute to a positive long-term outlook for Microchip, justifying the Buy rating and a price target of $60.
In another report released today, Raymond James also maintained a Buy rating on the stock with a $65.00 price target.