Microchip Technology Q3 adjusted EPS beats expectations

Overview

• Embedded control solutions provider's fiscal Q3 revenue up 15.6% yr/yr

• Adjusted EPS for fiscal Q3 beat analyst expectations

• Company declared quarterly dividend of 45.5 cents per share for March quarter

Outlook

• Microchip expects Q4 fiscal 2026 net sales between $1.240 bln and $1.280 bln

• Company anticipates gross margins to expand towards long-term target of 65%

• Microchip plans capital expenditures between $20 mln and $23 mln for qtr ending March 31

Result Drivers

• MARGIN EXPANSION - Significant margin expansion attributed to operational improvements and inventory reduction

• CONNECTIVITY BUSINESS - Strong momentum in connectivity business driven by modernization cycles in automotive and industrial markets

• INVENTORY REDUCTION - Substantial progress on inventory reduction positioning for improved operational efficiency

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 21 "strong buy" or "buy", 6 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the semiconductors peer group is "buy"

• Wall Street's median 12-month price target for Microchip Technology Inc is $85.00, about 8.7% above its February 4 closing price of $78.23

• The stock recently traded at 32 times the next 12-month earnings vs. a P/E of 30 three months ago

Press Release: ID:nGNX17WrF

For questions concerning the data in this report, contact Estimates.Support@lseg.com. For any other questions or feedback, contact reuters.support@thomsonreuters.com.