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Microchip drops as weak gross margin outlook overshadows chip-sector rebound

By Reuters News

** Shares of US semiconductor supplier Microchip MCHP.O fall 1.7% to $63.76 premarket, bucking gains in peers following the sector's selloff in the previous session

** Co on Thursday forecast gross margin of 64% to 65% in Q3, with upper end below analysts' mean estimate of 66.2% — data compiled by LSEG

** Supply limitations are constraining the outlook, CEO Steve Sanghi said, as bottlenecks at foundries, assembly and test partners, and internal operations leave some orders unfilled

** At least three brokerages cut PTs; JPM lowered its PT to $100 from $120, citing supply constraints and higher costs that are limiting margin expansion despite healthy demand

** Seven analysts rate the stock "strong buy" and six "hold"; their median PT is $98 — LSEG

** Up to last close, stock has risen 1.8% YTD

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