Microchip Technology shares rose Tuesday after the chipmaker beat Wall Street's targets for the March quarter and guided higher for the June quarter. MCHP stock jumped over 6% on the news.
The Chandler, Ariz.-based company late Monday said it earned an adjusted $1.35 a share on sales of $1.84 billion in its fiscal fourth quarter ended March 31. Analysts polled by FactSet expected Microchip earnings of $1.25 a share on sales of $1.82 billion. On a year-over-year basis, Microchip earnings jumped 45% while sales increased 26%.
For the current quarter, Microchip forecast adjusted earnings of $1.34 a share on sales of $1.96 billion. That's based on the midpoint of its guidance. Wall Street had predicted earnings of $1.28 a share on sales of $1.86 billion in the June quarter.
Also, Microchip raised its quarterly cash dividend 9.1% to 27.6 cents per share.
MCHP Stock Rises After Report
On the stock market today, MCHP stock climbed 6.1% to close at 68.25. During the regular session Monday, MCHP stock fell 4.8% to 64.31 during a big sell-off for stocks overall.
In a news release, Chief Executive Ganesh Moorthy said business conditions were very strong in the March quarter with demand outpacing supply.
"Based on the magnitude of the demand-supply imbalance, the size of our non-cancellable backlog, the rate at which new backlog continues to come in, and the pace at which we can bring new capacity online, we expect to remain supply-constrained throughout 2022 and into 2023," he said.
Covid-related lockdowns in China have added to the challenging supply environment, Moorthy said.
Microchip Stock Ranks Fifth
Microchip makes control chips for industrial, automotive, consumer, communications, computing, and aerospace and defense markets.
MCHP stock ranks fifth out of 44 stocks in IBD's semiconductor manufacturing industry group, according to IBD Stock Checkup. It has an IBD Composite Rating of 87 out of 99. IBD's Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock's strengths. The best growth stocks have a Composite Rating of 90 or better.
At least 12 Wall Street analysts cut their price targets on MCHP stock after Microchip's earnings report. They cited lower valuations for semiconductor stocks as the sector remains out of favor with investors.
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