Microchip (MCHP) PT, Est. Cut at Susquehanna Amid Q2 Warning

Susquehanna analyst Chris Caso lowered estimates and his price target on Microchip Technology (NASDAQ: MCHP) to $48.00 (from $55.00) following the company's warning after the close. However, the firm maintained a Positive rating.

Caso commented, "MCHP’s preannouncement last night leaves us with little doubt that an industry correction is upon us. The breadth of MCHP's business across such a large number of customers and market segments means that they are often early in identifying such a correction. To be sure, MCHP’s problems are partly self-inflicted, resulting from tight supply conditions, and the company’s letter to customers in July which in hindsight we think likely caused some double booking. Nonetheless, what MCHP’s business appears to have experienced in September is in our view evidence of broadly weakening macro conditions. The good news is that MCHP presently expects this to be a typical correction, implying a resumption of growth in the March quarter, and the magnitude of the miss is not particularly large. In addition, we still see significant potential accretion if they manage to close a deal to acquire CSR. With the group likely down meaningfully in reaction to MCHP's miss (coupled with bad news from JNPR as well), we expect that much of the downside will quickly be reflected in the stocks, and we will re-evaluate our view once we see how the group reacts."

The firm's September-quarter estimates move to $546.2 mln/$0.66 (ex. SBC), from $568 mln/$0.72. December quarter moves to $529.8 mln/$0.61, from $557 mln/$0.70. They have reduced our CY15 estimates to $2.25 bln/$2.73, from $2.36 bln/$3.06.

For an analyst ratings summary and ratings history on Microchip Technology click here. For more ratings news on Microchip Technology click here.

Shares of Microchip Technology closed at $45.54 yesterday.

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