Microchip Technology (NASDAQ:MCHP) Trading 12.8% Higher on Strong Earnings

Microchip Technology Incorporated (NASDAQ:MCHP)’s share price rose 12.8% during trading on Friday after the company announced better than expected quarterly earnings. The stock traded as high as $83.99 and last traded at $83.8420. 4,132,227 shares were traded during trading, a decline of 61% from the average session volume of 10,525,443 shares. The stock had previously closed at $74.36.

The semiconductor company reported $0.76 EPS for the quarter, topping the consensus estimate of $0.70 by $0.06. Microchip Technology had a net margin of 4.88% and a return on equity of 10.87%. The company had revenue of $1.48 billion during the quarter, compared to the consensus estimate of $1.46 billion. During the same period last year, the firm earned $0.27 EPS. Microchip Technology’s revenue for the quarter was up 38.0% on a year-over-year basis. Microchip Technology has set its Q2 2027 guidance at 0.910-0.950 EPS.

Microchip Technology Announces Dividend

The business also recently disclosed a quarterly dividend, which will be paid on Wednesday, September 9th. Investors of record on Monday, August 24th will be paid a dividend of $0.455 per share. This represents a $1.82 dividend on an annualized basis and a dividend yield of 2.2%. The ex-dividend date is Monday, August 24th. Microchip Technology’s payout ratio is presently 866.67%.

Key Stories Impacting Microchip Technology

Here are the key news stories impacting Microchip Technology this week:

• Positive Sentiment: Microchip reported fiscal Q1 earnings of $0.76 per share, exceeding the $0.70 consensus estimate. Revenue rose 38% year over year to $1.48 billion, also surpassing expectations of $1.46 billion. Microchip Technology quarterly earnings report
• Positive Sentiment: Management forecast fiscal Q2 2027 adjusted EPS of $0.91-$0.95, well above the $0.76 analyst consensus, and revenue of approximately $1.6 billion versus expectations of about $1.5 billion. The upbeat outlook reflects strengthening chip demand, including from AI data centers. Microchip forecasts upbeat quarterly revenue
• Positive Sentiment: Rosenblatt Securities reaffirmed its “buy” rating and maintained a $120 price target, implying substantial potential upside from recent trading levels. Rosenblatt rating update
• Positive Sentiment: A partnership with Micron combining PCIe Gen 6 switches and SSDs could expand Microchip’s presence in AI data-center infrastructure and improve its competitive position against Broadcom and Astera Labs. Microchip and Micron alliance
• Neutral Sentiment: Microchip declared a quarterly dividend of $0.455 per share, representing an annualized yield of approximately 2.4% and maintaining shareholder returns.
• Negative Sentiment: Truist Financial lowered its price target from $105 to $90 and moved to a “hold” rating, signaling caution about valuation or the extent of the near-term recovery. Truist price target update

Analysts Set New Price Targets

A number of research analysts have weighed in on the company. Zacks Research raised Microchip Technology from a “hold” rating to a “strong-buy” rating in a report on Tuesday, May 12th. Barclays boosted their price objective on shares of Microchip Technology from $80.00 to $105.00 and gave the company an “equal weight” rating in a research note on Monday, May 11th. Needham & Company LLC increased their target price on shares of Microchip Technology from $84.00 to $120.00 and gave the stock a “buy” rating in a research note on Friday, May 8th. Truist Financial reduced their price target on shares of Microchip Technology from $105.00 to $90.00 and set a “hold” rating for the company in a research report on Friday. Finally, TD Cowen lowered their price objective on Microchip Technology from $105.00 to $90.00 and set a “hold” rating on the stock in a research report on Monday, July 13th. Four research analysts have rated the stock with a Strong Buy rating, thirteen have given a Buy rating and seven have given a Hold rating to the company’s stock. According to MarketBeat.com, Microchip Technology currently has an average rating of “Moderate Buy” and a consensus price target of $99.05.

Insider Buying and Selling

In related news, Director Matthew W. Chapman sold 10,000 shares of the stock in a transaction on Friday, May 15th. The stock was sold at an average price of $95.48, for a total value of $954,800.00. Following the transaction, the director owned 20,665 shares of the company’s stock, valued at $1,973,094.20. This represents a 32.61% decrease in their ownership of the stock. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which is available through the SEC website. Also, CFO James Eric Bjornholt sold 3,667 shares of Microchip Technology stock in a transaction dated Friday, May 22nd. The stock was sold at an average price of $90.87, for a total value of $333,220.29. Following the sale, the chief financial officer directly owned 28,573 shares of the company’s stock, valued at approximately $2,596,428.51. This trade represents a 11.37% decrease in their position. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Over the last ninety days, insiders sold 26,750 shares of company stock worth $2,543,170. Corporate insiders own 1.79% of the company’s stock.

Hedge Funds Weigh In On Microchip Technology

A number of large investors have recently added to or reduced their stakes in MCHP. EFG International AG bought a new stake in shares of Microchip Technology in the 4th quarter valued at about $29,000. Miller Capital Partners Inc. bought a new position in Microchip Technology during the 4th quarter worth approximately $29,000. Continuum Advisory LLC purchased a new position in Microchip Technology in the 2nd quarter worth approximately $30,000. Reflection Asset Management purchased a new position in Microchip Technology in the 4th quarter worth approximately $33,000. Finally, Garton & Associates Financial Advisors LLC bought a new stake in Microchip Technology in the fourth quarter valued at approximately $33,000. Hedge funds and other institutional investors own 91.51% of the company’s stock.

Microchip Technology Stock Performance

The stock has a market cap of $45.49 billion, a PE ratio of 398.05, a price-to-earnings-growth ratio of 0.78 and a beta of 1.76. The company has a debt-to-equity ratio of 0.85, a current ratio of 2.09 and a quick ratio of 1.18. The business has a 50 day moving average price of $87.34 and a two-hundred day moving average price of $81.28.

Microchip Technology Company Profile

Microchip Technology Inc is a semiconductor company headquartered in Chandler, Arizona, that designs, develops and supplies a broad portfolio of embedded control and analog semiconductors. Its product lineup centers on microcontrollers (including the well-known PIC family), digital signal controllers and associated development tools and software, along with a range of mixed-signal and analog devices, nonvolatile memory, power management, timing, interface, wireless and security products. The company also provides integrated hardware and software solutions intended to simplify embedded design and accelerate time to market for OEMs and contract manufacturers.

Microchip’s products are used across a wide range of end markets, including automotive, industrial automation, consumer electronics, communications, aerospace and defense, and Internet of Things (IoT) applications.