- Microchip forecasted net sales for 1Q range between $1.22 billion to $1.26 billion, falling short of the estimated $1.34 billion.
- The projected adjusted gross margin stands at 59% to 61%, closely matching the estimate of 60.3%.
- 4Q results showed an adjusted EPS of 57c, which correlates with the estimated figure, showing a drop from $1.64 year-on-year.
- The adjusted gross margin for 4Q was 60.3%, a decline from the previous 68.3% year-on-year.
- Research and Development expenses amounted to $240.3 million, marking a 19% decrease year-on-year, and coming in below the estimated $260 million.
- Net sales for 4Q were at $1.33 billion, a hefty 41% drop off year-on-year.
- Expected capital expenditures for the forthcoming quarter (ending June 30, 2024) are anticipated to fall between $60 million and $70 million.
- The company experienced a substantial inventory correction in fiscal 2024, which resulted in a 9.5% decrease in revenue to $7.6 billion.
- Despite severe challenges, the company was able to maintain a non-GAAP operating margin of 43.9% due to its resilient operational model and quick adaptation to adverse business conditions, as stated by Ganesh Moorthy, President and CEO.
- Regardless of near-term hurdles, the company remains confident that its solutions will continue to serve as the innovation engine for its target markets, with strong emphasis on Total System Solutions and major trends driving potent design win momentum.
- The current analyst recommendations include 17 buys, 8 holds and no sells.
Microchip Technology on Smartkarma
Analysts on Smartkarma have varying sentiments on Microchip Technology‘s recent performance and future prospects. Baptista Research, in their report “Microchip Technology: How Their Latest Innovations Are Set to Dominate the Market! – Major Drivers,” highlighted the company’s challenges in the face of dropping net sales but noted resilient margins. They also aimed to independently assess the company’s valuation using the Discounted Cash Flow method.
Contrastingly, Andrew Lu presented a bearish view in “From the Bellwether to a Lagging Indicator – Why Does Microchip Guide the Worst Among All?” Lu expressed preference for Intel and Qualcomm over Microchip for the next six months, attributing Microchip’s struggles to its heavy reliance on automotive, industrial, and digital consumer sectors. Lu estimated a significant y/y sales decline for 2024 and suggested that the current price might not fully reflect the challenges the company faces.
A look at Microchip Technology Smart Scores
| Factor | Score | Magnitude |
|---|---|---|
| Value | 2 | |
| Dividend | 3 | |
| Growth | 5 | |
| Resilience | 2 | |
| Momentum | 4 | |
| OVERALL SMART SCORE | 3.2 |
Smart Score is a compound score for the Company indicating its overall outlook. It is derived by taking an equally weighted average of underlying Factor scores computed by Smartkarma
Microchip Technology Incorporated, a leading company in the microcontroller industry, has received a strong overall outlook based on Smartkarma Smart Scores. With a Growth score of 5, the company is poised for significant expansion in the long term, indicating a positive trajectory for future development and prosperity. Furthermore, a Momentum score of 4 suggests strong market performance and investor interest, showcasing stability and potential for continued success.
Although Microchip Technology scored lower in Value and Resilience, with scores of 2, its competitive strengths in Growth and Momentum indicate a promising outlook. With a solid foundation in designing and manufacturing innovative products for high-volume embedded control applications, the company is well-positioned to capitalize on future market opportunities and maintain a competitive edge in the industry.
Disclaimer: This article by Smartkarma is general in nature and based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Note that our articles may not factor in the latest price-sensitive company announcements or qualitative material.
While all reasonable care has been taken in the preparation, Smartkarma makes no assurance about the accuracy of any generated data or content. All content is indicative only and should be independently checked for accuracy and confirmed before use. Smartkarma accepts no responsibility for any loss or damage caused as a result of any inaccuracy or error within the Lab online tools or generated data.
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