Microchip Trading at a Discount of 33% to Analysts’ Estimates



Average stock price target of $114.56 for MCHIP

Semiconductor (SMH) stock Microchip Tech (MCHP) is currently trading at $86.03, which is 10.0% above its 52-week low of $78.33 and 17.4% below its 52-week high of $104.20. The stock has generated returns of -1.0% since the start of this year and has declined 5.0% in the last three months.

Of the 18 analysts tracking Microchip, 13 recommended a “buy,” five recommended a “hold,” and there is no “sell” recommendation on the stock. The average 12-month price target for Microchip (MCHP) is $114.56, which indicates that the stock is trading at a discount of 33.0% to analysts’ estimates.

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MCHP stock fell after its fiscal Q1 2019 results

Microchip (MCHP) announced its earnings for the fiscal first quarter of 2019[1. fiscal Q1 2019 ended June 30] on August 9, and its stock declined due to mixed results and poor guidance. There have also been concerns with respect to the ongoing trade war between the United States and China (FXI), which negatively impacted Microchip’s stock price this year.

However, does the recent price decline present an opportunity for investors? The average price target for Microchip appears to suggest that it does.

Microchip acquired Microsemi for an enterprise value of $10.15 billion, which indicates a premium of 17.0%. Microsemi is one of the largest players in the aerospace and defense vertical, as well as the telecom sector, which could drive Microchip’s revenue growth. Microchip also expects to achieve synergies of ~$300.0 million in the current fiscal year after this acquisition.


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