Microchip Technology (NASDAQ:MCHP) fell about 3.1% in after-hours trading on Monday. The decline follows the company’s weak Q3 sales outlook. The semiconductor company providing connected and secure embedded control solutions said that its top line could mark a higher-than-expected decline in Q3.
The company now expects a sequential decrease of about 22% in Q3 sales, more than its previous guidance range of a 15% to 20% decline. Microchip blamed the weak macroeconomic environment for the downward adjustment in its guidance.
The company’s CEO, Ganesh Moorthy, added that certain backlogs that were planned for shipment in Q3 did not reach customers before the end of the December quarter, subsequently impacting revenue.
What is the Future of Microchip Technology Stock?
The continued sequential decline in Microchip’s top line keeps analysts cautiously optimistic about its prospects. Notably, Microchip’s revenue decreased 1.5% quarter-over-quarter in Q2.
The stock has 11 Buy and five Hold recommendations for a Moderate Buy consensus rating. MCHP stock has gained about 18% year-to-date. Further, analysts’ average price target of $90.94 implies a limited upside potential of 6.19% from current levels.
