As previously reported, Citi upgraded Microchip (MCHP) to Buy from Neutral with a price target of $100, up from $75. Large cap U.S. analog companies should experience a peak to trough quarterly revenue decline of roughly 20%, says the analyst, who believes consensus estimates for Microchip are “close to bottoming.” The three factors that caused shares to trade at a discount – high debt, low tax, and a conglomerate discount – are “going away,” the analyst said. Additionally, the firm downgraded NXP Semiconductors (NXPI) to Sell and is recommending a pair trade of Overweight Microchip and Underweight NXP, noting that Microchip is trading at a below peer average valuation while NXP shares are trading “well above” peer average.
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