Microchip Technology MCHP recently introduced the Microchip Graphics Suite (MGS), a comprehensive solution aimed at simplifying the integration of graphical user interfaces (GUIs) into electronic devices.
Designed to enhance user experiences by enabling intuitive and visually appealing interactions, MGS supports embedded developers in incorporating animations, images and touchscreens into its designs.
Seamlessly integrating with Microchip’s 32-bit microcontrollers (MCUs) and microprocessors (MPUs), MGS is compatible with multiple development platforms like MPLAB Harmony v3 and Linux.
MGS offers powerful features such as a WYSIWYG interface, hardware-free prototyping simulator and broad support for various displays and touchscreens, making it an ideal tool for designers seeking efficiency and reusability across projects.
Microchip Technology Incorporated Price and Consensus
Microchip Technology Incorporated price-consensus-chart | Microchip Technology Incorporated Quote
Will Strong Portfolio Aid MCHP’s Prospect?
MCHP shares have declined 12.6% against the Zacks Computer & Technology sector’s return of 19.1% on a year-to-date basis.
Despite MCHP’s robust portfolio, persistent inflationary pressures and high interest rates have resulted in a weak macro environment.
It experienced a significant inventory correction, which resulted in a 45.8% year-over-year decline in the top line to $1.24 billion in first-quarter fiscal 2025. The distribution channels also reduced its inventory levels, which have negatively impacted the top line.
However, the latest move bodes well for Microchip’s focus on enhancing user experience through its MGS, streamlining GUI integration across diverse electronic devices.
It is benefiting from consistent strength in its microcontroller business. In first-quarter fiscal 2025, the company introduced the AVR DU family of 8-bit microcontrollers that feature integrated USB connectivity, enhanced security and improved power delivery over previous versions.
MCHP’s strong demand across multiple end markets, including industrial, automotive, aerospace and defense, data center and communications infrastructure, has been a key catalyst.
In August, the company introduced its latest Single Pair Ethernet (SPE) solutions with the launch of the LAN887x Ethernet PHY transceiver family. The solution is designed to meet the growing connectivity demands in the automotive, industrial, avionics, robotics and automation sectors.
Microchip expects net sales to be $1.12-$1.18 billion for second-quarter fiscal 2025. Non-GAAP earnings are anticipated to be between 40 cents and 46 cents per share.
The Zacks Consensus Estimate for revenues is pegged at $1.15 billion, indicating a 48.93% year-over-year decline. The consensus mark for earnings is pegged at 43 cents per share, declined by a couple of pennies in the past 30 days.
What Investors Should Do With MCHP Stock?
MCHP stock is not so cheap, as the Value Score of F suggests a stretched valuation at this moment.
The forward 12-month Price/Book ratio for MCHP stands at 6.60X, higher than its Zacks Semiconductor - Analog and Mixed industry’s 4.27X, reflecting a stretched valuation.
Microchip currently carries Zacks Rank #5 (Strong Sell), which implies that investors should stay away from investing in this stock at present.
Top-Rank Stocks To Buy
AudioEye AEYE, Aspen Technology AZPN and Badger Meter BMI are some better-ranked stocks in the broader technology sector. AudioEye and Aspen Technology currently sport Zacks Rank #1 (Strong Buy) at present, while Badger Meter carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AudioEye’s shares have surged 331.3% in the year-to-date period. The long-term earnings growth rate for AEYE is pegged at 25%.
Aspen Technology’s shares have moved up 8.6% in the year-to-date period. The long-term earnings growth rate for AZPN is currently projected at 13.12%.
Badger Meter’s shares have appreciated 42.2% in the year-to-date period. The long-term earnings growth rate for BMI is currently projected at 17.91%.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Badger Meter, Inc. (BMI) : Free Stock Analysis Report
Microchip Technology Incorporated (MCHP) : Free Stock Analysis Report
Aspen Technology, Inc. (AZPN) : Free Stock Analysis Report
Audioeye, Inc. (AEYE) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
