Citi reiterates Microchip stock as top pick, Texas Instruments second
Investing.com
Published Jul 14, 2025 06:23AM ET
Investing.com - Citi has reiterated Microchip Technology (NASDAQ:MCHP) as its top semiconductor pick, with Texas Instruments (NASDAQ:TXN) ranked second, citing expectations for highest earnings per share growth. Microchip Technology, currently trading at $74.56, has demonstrated strong momentum with a 33% return over the past six months. According to InvestingPro analysis, the stock appears overvalued at current levels.
The investment bank conducted a scenario analysis to assess normalized earnings potential for Microchip, Texas Instruments, and Analog Devices (NASDAQ:ADI). Citi defines normalized EPS as approximately the midpoint between peak and trough earnings per share.
According to Citi's analysis, Texas Instruments can achieve a normalized EPS of roughly $7.50, while Analog Devices can reach approximately $8.30. Microchip Technology is projected to deliver a normalized EPS of $2.81.
Citi maintains Buy ratings on all three semiconductor companies, expecting them to benefit from inventory replenishment in the Industrial end market. The firm also anticipates rapid increases in gross margins due to current low utilization rates across these manufacturers.
Microchip Technology secured the top position in Citi's ranking primarily due to its projected earnings growth potential, with Texas Instruments following as the second-most attractive investment opportunity among the three analyzed semiconductor stocks.
In other recent news, Microchip Technology has achieved military qualifications for its radiation-tolerant FPGAs, marking an important milestone for its space-focused semiconductor products. The company has attained MIL-STD-883 Class B and QML Class Q certifications, which are industry standards for high-reliability microelectronic components. Additionally, Microchip has partnered with Nippon Chemi-Con Corporation and NetVision Co. Ltd. to launch the first ASA-ML camera-development platform for the Japanese automotive market. This collaboration aims to promote the adoption of the ASA-ML standard in Advanced Driver-Assistance Systems. In leadership developments, Steve Sanghi has been appointed as the permanent CEO and President of Microchip Technology after serving in these roles on an interim basis. Goldman Sachs initiated coverage on Microchip Technology with a Buy rating, citing potential growth in the recovering microcontroller market. Meanwhile, Cantor Fitzgerald maintained a Neutral rating with a price target of $70, noting potential improvements in gross margins in the latter half of the year. These recent developments highlight Microchip's strategic efforts to enhance its market position and operational efficiency.
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Written By: Investing.com
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