Microchip forecasts Q3 adjusted gross margin below estimates

By Reuters News


Overview

  • US semiconductor supplier's Q2 sales rose 42% yr/yr, slightly beating analyst expectations

  • Adjusted EPS for Q2 beat analyst expectations

  • Company cites industrial and data center demand as key drivers of quarterly growth

  • Shares down 6% in extended trading


Outlook

  • Microchip sees December qtr net sales of $1.573 bln to $1.638 bln

  • Microchip expects December qtr non-GAAP EPS of $0.87 to $0.95

  • Forecasts Q3 non-GAAP gross margin of 64% to 65%, vs analysts' estimate of 66.19%


Result Drivers

  • END MARKET DEMAND - Co said broad-based growth was driven by industrial and data center applications

  • DESIGN WINS AND INNOVATION - Co attributed growth to new design wins and product innovations

  • OPERATIONAL IMPROVEMENTS - Co said lower growth in operating expenses relative to sales supported higher profitability


Company press release:


Key Details

Metric

Beat/Miss

Actual

Consensus Estimate

Q2 Sales

Slight Beat*

$1.62 bln

$1.61 bln (21 Analysts)

Q2 Adjusted EPS

Beat

$0.97

$0.93 (22 Analysts)

Q2 EPS

$0.68

Q2 Adjusted Net Income

$559.20 mln

Q2 Net Income

$373.60 mln

*Applies to a deviation of less than 1%; not applicable for per-share numbers.


Analyst Coverage

  • The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 21 "strong buy" or "buy", 6 "hold" and no "sell" or "strong sell"

  • The average consensus recommendation for the semiconductors peer group is "buy"

  • Wall Street's median 12-month price target for Microchip Technology Inc is $105.00, about 39.4% above its November 4 closing price of $75.34

  • The stock recently traded at 18 times the next 12-month earnings vs. a P/E of 21 three months ago


Reuters Recommended Reads

  • Nov 3 - Chipmaker AMD forecasts Q4 revenue above estimates on strong data center demand; shares rise

  • Nov 3 - Navitas Semiconductor Q3 revenue beats estimates on rising demand from AI data centers and grid infrastructure

  • Nov 3 - Arista Networks Q3 revenue beats estimates on strong momentum across customer sectors


For questions concerning the data in this report, contact Estimates.Support@lseg.com. For any other questions or feedback, contact reuters.support@thomsonreuters.com.


(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)

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