On Tuesday, Citi maintained its Buy rating on shares of Microchip Technology (NASDAQ:MCHP), traded on NASDAQ:MCHP, and increased the price target to $104 from the previous $100. The firm's decision comes after Microchip Technology reported its financial results, which aligned with expectations, but provided guidance for the June quarter below the anticipated figures.
Microchip Technology announced that the June quarter might represent the lowest point, citing a more severe than expected inventory build-up. However, the company expressed optimism, noting an acceleration in booking trends over the past three months. According to the company's assessment, this acceleration suggests that the June quarter could mark a turning point.
The firm observed that Microchip Technology's sales have fallen 45% from their peak, leading to the conclusion that the company is currently shipping quantities that are significantly below market demand. This under-shipment is seen as a temporary condition, with expectations set for a robust recovery in the second half of 2024.
Citi reiterated its confidence in Microchip Technology as its top pick within the analog sector, emphasizing the company's potential for a strong performance in the latter half of the year. The new price target of $104 reflects Citi's adjusted forecast and confidence in the company's rebound trajectory.
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