Microchip: Maintain $81 Fair Value Despite a Surprising CEO Transition

We’re surprised by the news of Microchip CEO and President Ganesh Moorthy announcing his retirement at the end of November, as we didn’t view a CEO transition as a likely near-term event. We maintain our $81 per share fair value estimate for wide-moat Microchip as longtime former CEO Steve Sanghi will run the company in the interim. We note that Rich Simoncic was promoted to the chief operating officer role in April 2024, perhaps as a CEO in waiting, as Moorthy served in the COO role for several years before taking the lead job. We have no unique knowledge of the situation, but we suspect that Simoncic is the most likely candidate to take over the role. We don’t anticipate any change in business strategy with this CEO transition.