Close

Stifel Upgrades Microchip Technology (MCHP) On Favorable Risk-Reward

June 28, 2022 10:02 AM EDT
Get Alerts MCHP Hot Sheet
Price: $77.31 -1.29%

Rating Summary:
    21 Buy, 11 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 2 | Down: 23 | New: 24
Join SI Premium – FREE

News and research before you hear about it on CNBC and others. Claim your 1-week free trial to StreetInsider Premium here.

Microchip Technology (NASDAQ: MCHP) was upgraded from Hold to Buy, and its price target was raised to $75 from $70 by Stifel analyst Tore Svanberg on Tuesday.

The analyst said that when "compared to the 2008 crisis, while MCHP remains a more defensive name having proved more resilient at -54% returns (vs.-60% large-cap returns on average), it appears that now MCHP is relatively underperforming in the current environment."

"As of 6/27/22, MCHP is trading at a 9.8x P/E on CY23 NG EPS (vs. 8.4x in 2020). This valuation multiple is nearing the lowest MCHP has traded in the past five years, with the lowest P/E multiple of 8.1x on 10/26/18," wrote Svanberg. "With the stock trading at an attractive P/E (while recognizing P/E is less of a reliable valuation metric when the macroeconomic environment is deteriorating), MCHP is getting very close to a NT trough. Meanwhile, the company’s growth prospects over the next 12 months appear resilient (as further discussed below) with CY23 EPS growing at +11.6% y/y, in our view."

The analyst continued, stating that their analysis of the two most recent downturns, including the 2008 Great Recession and 2020 COVID crisis, show its resilience.

"Coupled with MCHP’s increasingly favorable TTM FCF yield (7.21% as of 6/27/22’s closing price of $60.67), we believe the risk reward levels now appear favorable, especially as a more defensive focus in an increasingly uncertain macro environment given our views of MCHP’s resilience to financial downturns with strong backlog visibility."

By Sam Boughedda



Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In





Related Categories

Analyst Comments, Hot List, Upgrades

Related Entities

Stifel