Pacific Crest analyst Ruben Roy this morning cut his rating on Microchip Technology (MCHP) to Market Perform from Outperform, noting that “recent channel checks with supply chain vendors indicate a more cautious tone on overall demand trends.” He adds that “active inventory management”� will lead to lower on-hand inventory at distributors over the next two quarters.
“With respect to end-demand specifics,” he adds, “consumer demand (particularly in China) remains the weakest area, while industrial end markets specific to Microchip held up well through CQ3. Overall, however, feedback from the supply chain was less optimistic on CQ4 and CQ1 versus our late-August checks.”
Concludes Roy: “Company execution remains solid, but given fundamentals that are above prior peaks and more muted checks, we would wait for stock price consolidation before revisiting MCHP.”
Nonetheless, MCHP this morning is up 11 cents, or 0.4%, to $31.36.
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