Analyst Joseph Moore of Morgan Stanley maintained a Hold rating on Microchip (MCHP – Research Report), reducing the price target to $53.00.
Joseph Moore has given his Hold rating due to a combination of factors impacting Microchip Technology. The company is actively working on a restructuring plan to align its operations with a revenue level lower than previous cycles, indicating a cautious approach to its financial model. While there is confidence in the management’s ability to execute this plan, there are uncertainties regarding the company’s long-term steady state.
Microchip’s near-term revenue recovery is partly dependent on external market conditions, and the company faces challenges such as increased interest payments and competition. Despite the return of CEO Steve Sanghi bringing decisive actions, the impact on employee morale and corporate culture due to layoffs is a concern. Additionally, the peak-to-trough revenue decline raises questions about the company’s M&A track record, leading to a cautious outlook reflected in the Hold rating.
In another report released yesterday, TD Cowen also maintained a Hold rating on the stock with a $60.00 price target.