Cantor Fitzgerald has reaffirmed its Overweight rating on Microchip Technology and kept a $100.00 price target following the chipmaker's most recent quarterly update. The price objective implies approximately 35.6% upside from the stock's present level of $73.76 and sits alongside broader upward revisions to earnings expectations, with InvestingPro tracking 16 analysts who have recently lifted forecasts.
The research house described the quarter as "solid" even though the stock faced selling pressure after hours. Microchip delivered results ahead of expectations and raised guidance, supported by two intra-quarter presentations that the firm characterized as positive.
Cantor highlighted several operational trends underpinning its view. Bookings have strengthened, with January singled out as "extremely strong." The company is reporting healthy channel inventories, more expedites and a backlog that is building into the June quarter, signals the firm interprets as a broad-based recovery across most end-markets.
Margin performance was another focal point. Cantor noted expanding gross margins that have widened faster than the firm had expected, attributing the improvement to stronger revenue, a favorable product mix and reductions in inventory reserve charges. Those margin gains, together with elevated free cash flow, are allowing management to prioritize debt reduction, according to the research note.
InvestingPro data cited in the research note corroborates Microchip's financial strength. The company shows a gross profit margin of 55.4% and a current ratio of 2.16, indicating that liquid assets comfortably exceed short-term liabilities.
On positioning, Cantor Fitzgerald reiterated that Microchip is its "preferred Analog trade into the upcycle," a view driven by the company's industrial exposure, ramps in data center products and the potential for further gross margin expansion. The firm projects upside to the company's earnings power, modeling calendar-year 2027 earnings of $4.00 versus a consensus estimate of $3.48.
Despite those forward-looking expectations, the company has not been profitable over the last twelve months. InvestingPro analysis referenced by Cantor indicates net income is expected to grow this year, a development that the firm sees as supporting the longer-term bullish thesis.
Additional analyst actions and company results were also noted. Microchip reported fiscal third-quarter 2026 earnings per share of $0.44, topping a $0.42 consensus, and revenue of $1.19 billion versus expected revenue of $1.17 billion. Responding to the quarter and the demand backdrop, Needham raised its price target to $84.00 from $77.00, citing an improving demand environment. TD Cowen moved its price target to $70.00 from $75.00, pointing to a gradual demand recovery but stronger bookings for the June quarter. KeyBanc reiterated an Overweight rating and set an $85.00 price target following the positive fiscal third-quarter results.
The mix of analyst responses reflects differing near-term views on demand recovery and the pace of margin improvement, while Cantor's note emphasizes bookings, backlog and margin dynamics as the primary drivers of its more bullish stance.
For readers interested in further detail, the research references additional InvestingPro materials, including ProTips and a comprehensive Pro Research Report on Microchip.
Clear summary
Cantor Fitzgerald maintained an Overweight rating and a $100.00 price target on Microchip following a quarter that beat expectations and produced raised guidance. The firm cited strong bookings, inventory health, expanding gross margins and increasing backlog as evidence of a broad-based recovery, while InvestingPro data supports the company's robust margins and liquidity.
Key points
- Cantor Fitzgerald kept an Overweight rating and $100.00 price target, implying roughly 35.6% upside from $73.76.
- Operational indicators include "extremely strong" January bookings, healthy channel inventories, rising expedites and backlog growth into the June quarter.
- Gross margins are widening faster than expected, supported by better revenue, rich product mix and lower inventory reserve charges; free cash flow enables a focus on debt reduction.
Sectors impacted
- Semiconductors
- Industrial end-markets
- Data center infrastructure
Risks and uncertainties
- Profitability has not been achieved over the past twelve months - net income is expected to grow this year, but the company remains unprofitable on a trailing 12-month basis. This affects investor returns and valuation assumptions in the semiconductor sector.
- Analyst views diverge on near-term demand recovery, as reflected in differing price targets and notes from Needham, TD Cowen and KeyBanc - signaling uncertainty about the pace of end-market demand across technology and industrial customers.
- After-hours selling pressure following the quarter demonstrates market sensitivity to near-term results and guidance, which could impact short-term stock volatility in the technology and semiconductor sectors.