(MCHP) Microchip Technology – Bear of the Day

Microchip Technology (MCHP) recently reported net income of $79.3 million for the second quarter, down 20.2% sequentially and down 23.0% year over year. EPS came in at $0.42, missing the Zacks Consensus Estimate by $0.02. Microchip started the September quarter expecting broad-based demand weakness.

The company expected late summer orders for normal Christmas-related builds in September, but distributors did not see any sales related to Christmas builds materialize. Microchip continues to see a broad-based weakness in all markets and in all geographies.

Therefore, based on weak earnings expectations, we continue to maintain our Underperform recommendation on Microchip Technology. We set a target price of $33.00 based on a 2012 P/E multiple of 18.6x.

MICROCHIP TECH (MCHP): Free Stock Analysis Report

Zacks Investment Research

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