Microchip Technology Inc. (MCHP) – Demand and supply create challenges for MCHP

Microchip Technology Inc. (MCHP) (Q1FY24)

Stock performance: Microchip Technology’s stock price showed a downtrend in the past 3-month period and gave negative returns of -18%. The stock price increased by 17% in the past 1-year. The stock has a 52-week high of $94.30 and its 52-week low is $58.61.

Q1FY24 Performance: In Q1FY24, MCHP achieved a 2.5% sequential increase in net sales, reaching $2.289bn. Their adjusted EBITDA hit a record 51.2% of net sales, highlighting robust operational performance. The company also reported a substantial leap in non-GAAP earnings per share (EPS) to a record $1.64, marking a notable 19.7% increase from the previous year.

Management Guidance: For Q2FY24, Revenue is expected to be between $2.22bn and $2.312bn. MCHP expects non-GAAP gross margin to be between 68.3% and 68.5% of sales.

The company expects non-GAAP operating expenses to be between 20.1% and 20.5% of sales. Non-GAAP operating profit is expected to be between 47.8% and 48.4% of sales, and our non-GAAP diluted earnings per share is expected to be between $1.60 per share and $1.64 per share.

Highlights

MCHP is pursuing sustained revenue growth in the semiconductor industry. Their strategy centers on Technology Solutions and Services (TSS) and Megatrends, aiming for a 5-year
Organic Revenue CAGR of 10% – 15%. They’re committed to elite margins, targeting Gross Margin (67.5% – 68.5%) and Operating Margin (44% – 46%).

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Highlights

Valuation

– Enterprise Value
– CrispIdea Forecast
– Economic Value Added Analysis
– Discounted Cash Flow Analysis
– P/E Analysis
– Peer Valuation
– CrispIdea Forecast Relative to Consensus
– Consensus History and Surprise
– Consensus Momentum

Actual & Historical Performance

– Income Statement
– Balance Sheet
– Cash Flow
– 10 Year Historical Performance
– Ratio Analysis
– Du Pont Analysis
– ROIC & ROCE Analysis
– Segment Performance
– Key Developments
– M&A Deals

Peer Performance

– Summary
– Profitability
– Growth
– Price Performance

Ownership

Stock Price Performance

Crispidea Coverage

No of Pages: 37

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