Microchip Technology Earnings: Maintain $90 Valuation Even as Revenue Faces a Hard Landing

Wide-moat Microchip Technology reported predictably soft fiscal third-quarter results but provided investors with an even gloomier outlook for the March quarter and not much hope for a quick recovery in the June quarter either. Nonetheless, we maintain our $90 fair value estimate as Microchip is taking sharp and decisive actions to brace itself for this latest cyclical downturn. The company and its exemplary management team have weathered these types of storms before, and we’re confident they’ll do so again. Shares appear modestly undervalued to us.