1-Star Price
PREMIUM
5-Star Price
PREMIUM
Economic Moat
PREMIUM
Capital Allocation
PREMIUM
Wide-moat Microchip Technology reported strong fiscal first-quarter results and its expectations for the rest of fiscal 2022 (ending March 2022) were ahead of our prior expectations, as the company’s backlog of orders continues to expand because of tremendous near-term demand. We will raise our fair value estimate to $165 from $150. Shares were up only modestly after hours to $150, so we now view shares as modestly undervalued.
Microchip became an independent company in 1989 when it was spun off from General Instrument. More than half of revenue comes from MCUs, which are used in a wide array of electronic devices from remote controls to garage door openers to power windows in autos. The company's strength lies in lower-end 8-bit MCUs that are suitable for a wider range of less technologically advanced devices, but the firm has expanded its presence in higher-end MCUs and analog chips as well.
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