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Earnings To Watch: Microchip Technology (MCHP) Reports Q3 Results Tomorrow

StockStory - Wed Jan 31, 1:01AM CST

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Analog chipmaker Microchip Technology (NASDAQ:MCHP) will be reporting earnings tomorrow after market close. Here's what to expect.

Last quarter Microchip Technology reported revenues of $2.25 billion, up 8.7% year on year, missing analyst expectations by 0.5%. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter and a miss of analysts' revenue estimates.

Is Microchip Technology buy or sell heading into the earnings? Read our full analysis here, it's free.

This quarter analysts are expecting Microchip Technology's revenue to decline 19% year on year to $1.76 billion, a deceleration on the 23.4% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted earnings are expected to come in at $1.04 per share.

Microchip Technology Total Revenue

The analysts covering the company have been growing increasingly bearish about the business heading into the earnings, with revenue estimates seeing 16 downward revisions over the last thirty days. The company missed Wall St's revenue estimates twice over the last two years.

Looking at Microchip Technology's peers in the semiconductors segment, some of them have already reported Q3 earnings results, giving us a hint of what we can expect. Skyworks Solutions's revenues decreased 9.6% year on year, missing analyst estimates by 0.2% and Texas Instruments reported revenue decline of 12.7% year on year, missing analyst estimates by 1.4%. Texas Instruments was down 3.7%, and Skyworks traded up 5.5% on the results.

Read our full analysis of Skyworks Solutions's results here and Texas Instruments's results here.

Investors in the semiconductors segment have had steady hands going into the earnings, with the stocks up on average 0.5% over the last month. Microchip Technology is down 0.6% during the same time, and is heading into the earnings with analyst price target of $93.4, compared to share price of $86.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

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The author has no position in any of the stocks mentioned.

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