Microchip forecasts Q3 adjusted gross margin below estimates

Microchip Technology

Thu 21:29

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: ID:nGNX2nPFtM

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.)