Company Reports

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.

Microchip Technology is a leading supplier of microcontrollers, or MCUs, which are semiconductors that act as the brains in a wide variety of common electronic devices, from garage door openers to thermostats to home appliances like dishwashers and all types of products in between. We view Microchip as one of the best-run firms within the chip space and like the firm’s ability to generate free cash flow under virtually any economic scenario.

Wide-moat Microchip Technology reported decent fiscal 2024 second-quarter results but provided investors with a gloomy forecast by guiding to its worst sequential revenue decline in at least a decade, and likely since the credit crisis. We don’t believe business conditions have deteriorated to levels seen during that panic. We attribute the revenue shortfall to inventory digestion after a couple of years of tremendous growth, as customers rushed to place orders with Microchip (many of which were part of its noncancellable customer program). While we expect this inventory correction to damp results in the near term, we consider Microchip to be particularly adept at navigating industry cycles, and we often find downturns to be attractive buying opportunities for patient investors with a long-term time horizon. We maintain our $90 fair value estimate, and we view the shares as undervalued.

Wide-moat Microchip Technology reported solid fiscal first-quarter results but provided investors with a muted outlook for the September and December quarters. We maintain our $90 fair value estimate and view shares as fairly valued. Microchip was long considered by many as a canary in the coal mine regarding broad-based chip demand. However, as its product mix has shifted, and because of the large backlog and long lead times that persist for its products during the global chip shortage, we surmise that Microchip’s looming slowdown isn’t a new downdraft, but rather some headwinds that are on par with peers after several quarters of relative outperformance.

Wide-moat Microchip Technology reported solid fiscal fourth-quarter results and provided investors with a resilient forecast for the June quarter. We maintain our $90 fair value estimate and continue to view shares as undervalued. Shares sold off about 5% after hours, likely because inventory is building up and Microchip is rescheduling some customer orders to avoid even more inventory being stuffed into the supply chain. Even if an inventory correction were to occur, we consider Microchip to be particularly adept at navigating industry cycles, and we often find downturns to be attractive buying opportunities for patient investors with a long-term time horizon.

Wide-moat Microchip Technology reported healthy fiscal third-quarter results and gave investors a relatively upbeat forecast for the March quarter that was ahead of our prior expectations. We raise our fair value estimate to $90 from $83 as we modestly boost our long-term growth assumptions, and we view shares as slightly undervalued.

Microchip Technology is a leading supplier of microcontrollers, or MCUs, which are semiconductors that act as the brains in a wide variety of common electronic devices, from garage door openers to electric shavers to home appliances like dishwashers and all types of products in between. We view Microchip as one of the best-run firms within the chip space and like the firm’s ability to generate free cash flow under virtually any economic scenario.

Wide-moat Microchip Technology reported strong fiscal 2023 second-quarter results and bucked the trend among analog and mixed-signal chipmakers by providing investors with upbeat guidance for the December quarter, ahead of FactSet consensus estimates. Minimal exposure to PCs and smartphones has helped the firm dodge headwinds in the near term, while it is still benefiting from the global chip shortage and robust demand across its core end markets. We maintain our $83 fair value estimate; the shares were up in after-hours trading but are still undervalued, in our opinion.

Microchip Technology is a leading supplier of microcontrollers, or MCUs, which are semiconductors that act as the brains in a wide variety of common electronic devices, from garage door openers to electric shavers to home appliances like dishwashers and all types of products in between. We view Microchip as one of the best-run firms within the chip space and like the firm’s ability to generate free cash flow under virtually any economic scenario.

Microchip Technology reported solid fiscal first-quarter results and provided investors with a nice forecast for the September quarter, as the global semiconductor shortage wages on, and demand for Microchip's products continues to exceed supply. We maintain our $83 fair value estimate for wide-moat Microchip and continue to view shares as undervalued.

Wide-moat Microchip Technology reported solid fiscal fourth-quarter results and provided investors with an upbeat forecast for the June quarter as chip demand still significantly exceeds supply. We maintain our $83 fair value estimate and view shares as undervalued.

Microchip Technology is a leading supplier of microcontrollers, or MCUs, which are semiconductors that act as the brains within a wide variety of common electronic devices, from garage door openers to electric toothbrushes to home appliances and all types of products in between. We view Microchip as one of the best-run firms within the chip space and remain fond of the firm’s ability to generate free cash flow under virtually any economic scenario.

Wide-moat Microchip Technology reported strong fiscal third-quarter results and provided investors with a solid outlook for the March quarter amid the global semiconductor shortage. Microchip backlog of non-cancellable chip orders remains massive and grew even further in the quarter. For the bulk of 2022, we expect the company to ship virtually every chip it can manufacture this year, as demand is well in excess of supply. We maintain our $83 fair value estimate and view shares as modestly undervalued.

Our key takeaway from Microchip Technology’s analyst day was the firm’s new long-term financial model, which included reasonable growth and profitability targets that are in line with our forecast and that we think Microchip can ultimately achieve. We maintain our $83 fair value estimate for wide-moat Microchip and view shares as fairly valued.

Wide-moat Microchip Technology reported solid fiscal second-quarter results and provided investors with an upbeat outlook for the December quarter, as broad-based demand from the company’s chips is well in excess of supply, consistent with the ongoing global semiconductor shortage. We maintain our $83 fair value estimate and view shares as fairly valued. Our long-term thesis for Microchip remains intact--although supply and demand will come back into balance at some point down the line, Microchip’s content within cars, industrial equipment, and a host of other gadgets is still rising.

Microchip Technology is a leading supplier of microcontrollers, or MCUs, which are semiconductors that act as the brains within a wide variety of common electronic devices, from garage door openers to electric toothbrushes to home appliances and all types of products in between. We view Microchip as one of the best-run firms within the chip space and remain fond of the firm’s ability to generate free cash flow under virtually any economic scenario.

Microchip Technology is a leading supplier of microcontrollers, or MCUs, which are semiconductors that act as the brains within a wide variety of common electronic devices, from garage door openers to hands-free soap dispensers to electric razors and all types of products in between. We view Microchip as one of the best-run firms within the chip space and remain fond of the firm’s ability to generate profitability and free cash flow under virtually any economic scenario.

Microchip Technology is a leading supplier of microcontrollers, or MCUs, which are semiconductors that act as the brains within a wide variety of common electronic devices, from garage door openers to hands-free soap dispensers to electric razors and all types of products in between. We view Microchip as one of the best-run firms within the chip space and remain fond of the firm’s ability to generate profitability and free cash flow under virtually any economic scenario.

Wide-moat Microchip Technology reported strong fiscal first-quarter results and its expectations for the rest of fiscal 2022 (ending March 2022) were ahead of our prior expectations, as the company’s backlog of orders continues to expand because of tremendous near-term demand. We will raise our fair value estimate to $165 from $150. Shares were up only modestly after hours to $150, so we now view shares as modestly undervalued.

Wide-moat Microchip reported solid fiscal fourth-quarter results and provided investors with an upbeat outlook for the June quarter as the company is seeing robust demand for chips used in a variety of end markets. We raise our fair value estimate to $150 per share from $140, mostly due to the time value of money as we roll our valuation model. Similar to its peers, Microchip is seeing a semiconductor shortage and chip demand far exceeding supply, but this exemplary management team continues to navigate the supply challenges well, including the firm’s Preferred Supply Program, or PSP, which has improved its customer order visibility. We view shares as fairly valued.