Fineacre Securities Limited - Analysts Say 'Analog Renaissance' could help Microchip Tech Come Back

Microchip Technology (MCHP) shares recovered from early losses Tuesday after Jefferies analysts boosted their price objective for the company and predicted a "Analog Renaissance."
SHEUNG WAN, Hong Kong - Jan. 11, 2024 - PRLog -- Shares fell in early trade as the business warned that its latest quarterly earnings would fall short of earlier expectations, citing lower demand owing to economic circumstances.

"The decreasing economic environment that our clients and distributors faced during the December 2023 period resulted in many of them seeking to receive a lower level of shipments as they took measures to further de-risk their inventory positions," Microchip Technology CEO Ganesh Moorthy said in a statement.

According to early financial data, the business now expects sales of roughly $1.76 billion in its fiscal third quarter, which ends December 31, 2023. That would represent a 22% reduction from the prior quarter.

That reduction is also greater than Microchip Technology's earlier prediction, which predicted a 15% to 20% drop in sales, as well as VisibleAlpha's consensus estimates.

Microchip Technology plans to reveal its complete findings on February 1.

The analysts added that the company could benefit from the "4th Tectonic Shift in Computing," which they described as a shift toward parallel processing and Internet of Things (IoT) applications, which could include "efforts dedicated to highly integrated analog design" and a "continued consolidation of the analog industry."

Microchip Technology shares were over 1% higher at $86.41 per share as of around 2 p.m. ET Tuesday, having risen more than 17% in the previous year.

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