Zacks Investment Research Lowers Microchip Technology (MCHP) to Sell

Zacks Investment Research downgraded shares of Microchip Technology (NASDAQ:MCHP) from a hold rating to a sell rating in a research note released on Monday morning.

According to Zacks, “Microchip reported stellar third-quarter results. Also, both top and bottom line increased year over year. However, the company provided not so encouraging forthcoming guidance. Increasing lead time and significant exposure to Asian markets is anticipated to limit gross margin expansion. Unfavorable movement in exchange rates continue to adversely impact the top line of the company and undermine its growth potential to some extent. Microchip has a highly leveraged balance sheet which adds to its woes. Nonetheless, the company is benefiting from robust demand for 8-bit, 16-bit and 32-bit microcontrollers. We believe Microchip is well poised to capitalize on Microsemi’s growth catalysts. Apart from a robust portfolio, the buyout is likely to expand Microchip’s total addressable markets. Microchip also rides on strong demand for microcontroller and analog products, robust product pipeline and excellent semiconductor industry prospects.”

Several other research firms have also recently commented on MCHP. Needham & Company LLC lowered their target price on Microchip Technology to $100.00 and set a strong-buy rating on the stock in a research report on Friday, October 26th. BidaskClub upgraded Microchip Technology from a strong sell rating to a sell rating in a research report on Friday, November 2nd. Piper Jaffray Companies set a $130.00 target price on Microchip Technology and gave the company a buy rating in a research report on Thursday, November 8th. Bank of America lowered their target price on Microchip Technology from $86.00 to $80.00 and set a neutral rating on the stock in a research report on Thursday, November 8th. Finally, B. Riley lowered their target price on Microchip Technology from $105.00 to $100.00 and set a buy rating on the stock in a research report on Thursday, November 8th. One investment analyst has rated the stock with a sell rating, seven have assigned a hold rating, thirteen have assigned a buy rating and one has given a strong buy rating to the company. The company currently has a consensus rating of Buy and a consensus target price of $103.95.

Shares of NASDAQ MCHP opened at $91.19 on Monday. The company has a market capitalization of $21.69 billion, a P/E ratio of 17.57, a P/E/G ratio of 1.11 and a beta of 1.21. Microchip Technology has a 12-month low of $60.70 and a 12-month high of $104.20. The company has a debt-to-equity ratio of 2.04, a quick ratio of 1.83 and a current ratio of 2.92.

Microchip Technology (NASDAQ:MCHP) last announced its quarterly earnings results on Tuesday, February 5th. The semiconductor company reported $1.66 earnings per share (EPS) for the quarter, topping the consensus estimate of $1.45 by $0.21. The business had revenue of $1.42 billion for the quarter, compared to the consensus estimate of $1.40 billion. Microchip Technology had a return on equity of 32.30% and a net margin of 6.53%. The business’s revenue was up 42.5% on a year-over-year basis. During the same quarter last year, the business posted $1.36 EPS. On average, research analysts forecast that Microchip Technology will post 5.89 earnings per share for the current year.

The company also recently declared a quarterly dividend, which will be paid on Thursday, March 7th. Stockholders of record on Thursday, February 21st will be given a dividend of $0.365 per share. The ex-dividend date of this dividend is Wednesday, February 20th. This is a boost from Microchip Technology’s previous quarterly dividend of $0.36. This represents a $1.46 annualized dividend and a dividend yield of 1.60%. Microchip Technology’s dividend payout ratio (DPR) is 28.13%.

In other news, CFO James Eric Bjornholt sold 1,866 shares of the firm’s stock in a transaction on Friday, November 23rd. The stock was sold at an average price of $72.06, for a total transaction of $134,463.96. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is available through this link. Also, VP Stephen V. Drehobl sold 4,271 shares of the firm’s stock in a transaction on Friday, November 23rd. The stock was sold at an average price of $72.06, for a total value of $307,768.26. Following the sale, the vice president now directly owns 17,173 shares of the company’s stock, valued at $1,237,486.38. The disclosure for this sale can be found here. Over the last three months, insiders have sold 9,722 shares of company stock valued at $769,077. Corporate insiders own 2.13% of the company’s stock.

Institutional investors and hedge funds have recently added to or reduced their stakes in the company. Oregon Public Employees Retirement Fund boosted its position in shares of Microchip Technology by 7,043.2% in the fourth quarter. Oregon Public Employees Retirement Fund now owns 1,841,512 shares of the semiconductor company’s stock worth $26,000 after buying an additional 1,815,732 shares during the period. Morgan Dempsey Capital Management LLC acquired a new stake in shares of Microchip Technology in the fourth quarter worth $28,000. Lindbrook Capital LLC acquired a new stake in shares of Microchip Technology in the fourth quarter worth $32,000. Enlightenment Research LLC acquired a new stake in shares of Microchip Technology in the fourth quarter worth $43,000. Finally, Doyle Wealth Management acquired a new stake in shares of Microchip Technology in the fourth quarter worth $44,000.

About Microchip Technology

Microchip Technology Incorporated develops, manufactures, and sells semiconductor products for various embedded control applications. The company offers general purpose and specialized 8-bit, 16-bit, and 32-bit microcontrollers; 32-bit microprocessors; and microcontrollers for automotive networking, computing, lighting, power supplies, motor control, human machine interface, security, wired connectivity, and wireless connectivity.

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