Thirteen banks cut Microchip targets, none dropped Buy; consensus sits 43% above $60.33
Almost none of the banks withdrew Buy ratings while cutting, so the street now says the next quarters are smaller but the business is intact. Holders of the $5.6 billion-a-year analog chipmaker, and every non-AI chip name priced like it, carry the question of whether the Buy column or the tape is early.
Richard Tangtwo-minute read
Thirteen research desks at investment banks cut their price targets on Microchip Technology+0.28% — Microchip Technology, up 0.28 percent today in two trading sessions, and Argus Research finished the wave on Monday at $100, down from $130. The cuts landed one trading day after the chipmaker's fiscal-second-quarter report on November 5, and none of the thirteen stopped calling the stock a Buy. Shareholders now hold two numbers that cannot both be right for long.
Smaller quarters, not a broken company
Twelve banks moved on November 6: Morgan Stanley+1.43% — Morgan Stanley, up 1.43 percent today took its target to $72 from $103, Evercore+1.11% — Evercore, up 1.11 percent today ISI to $75 from $117, Citigroup+1.58% — Citigroup, up 1.58 percent today to $75 from $95, and KeyBanc, Rosenblatt, UBS, Needham, Susquehanna, Barclays+0.22% — Barclays, up 0.22 percent today, B 2. Riley, Wells Fargo+0.49% — Wells Fargo, up 0.49 percent today and Cantor Fitzgerald each marked down too, by between 4% and 36% 2. Argus Research added the thirteenth cut on November 10, to $100 from $130 2. Not one headline withdrew a rating, and UBS and B. Riley reaffirmed Buy outright in the same note as the cut. Read together, the desks are signaling smaller coming quarters, not a damaged business.
The Buy column and the tape disagree by 43%
The stock closed Monday at $60.33, down 22.55% this year 2. Yet 79 of 103 analysts rate it a Buy, none at Sell, with a median target of $108 and a consensus average of $86.48, about 43% above the close 12. Someone in that pair is early, and holders get paid or penalized for guessing which this month: the shares go ex-dividend on November 23 at $0.455 2. Sizing that disagreement, and the dividend date inside it, is what a holder can actually do with the gap.
Twelve banks cut their Microchip targets in one session
Every desk moved lower, but only KeyBanc stayed above $120
- Target before
- After the cut
Data
| Target before | After the cut | Change | |
|---|---|---|---|
| Morgan Stanley | $103 | $72 | -30.1% |
| Evercore ISI | $117 | $75 | -35.9% |
| Citigroup | $95 | $75 | -21.1% |
| Wells Fargo | $80 | $70 | -12.5% |
| UBS | $105 | $85 | -19.0% |
| B. Riley | $98 | $85 | -13.3% |
| Needham | $120 | $85 | -29.2% |
| Susquehanna | $120 | $100 | -16.7% |
| Barclays | $105 | $90 | -14.3% |
| Cantor | $125 | $100 | -20.0% |
| KeyBanc | $135 | $120 | -11.1% |
| Rosenblatt | $120 | $115 | -4.2% |
What got repriced is the non-AI half of chips
The wave matters beyond one ticker. Microchip sells about $5.6 billion a year in microcontrollers and analog parts into appliances, cars and factory gear 1. It is the non-AI half of the chip economy, and that half is shrinking while AI-chip names guide up. If the Buy column is right, every analog name sitting between the two markets is being marked down ahead of a cycle turn; if the tape is right, the downturn has another leg. The $54.92 weekly low is the sellers' line, and the level that decides the argument 1.
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