Why Microchip Technology (MCHP) Stock Is Lower In Pre-Market Trading Monday

NEW YORK (TheStreet) -- Shares of Microchip Technology Inc. (MCHP) are lower -1.28% to $46.99 in pre-market trading on Monday due to a ratings downgrade to "neutral" from "buy" at Goldman Sachs (GS).

The firm said it lowered its rating on the company, which develops and manufactures specialized semiconductor products, based on a valuation call.

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Separately, TheStreet Ratings team rates MICROCHIP TECHNOLOGY INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate MICROCHIP TECHNOLOGY INC (MCHP) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and notable return on equity. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 3.1%. Since the same quarter one year prior, revenues rose by 14.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 78.57% and other important driving factors, this stock has surged by 29.29% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • MICROCHIP TECHNOLOGY INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, MICROCHIP TECHNOLOGY INC increased its bottom line by earning $1.81 versus $0.61 in the prior year. This year, the market expects an improvement in earnings ($2.75 versus $1.81).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income increased by 86.8% when compared to the same quarter one year prior, rising from $59.69 million to $111.50 million.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, MICROCHIP TECHNOLOGY INC's return on equity exceeds that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: MCHP Ratings Report
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