By Nate Wolf

Microchip Technology jumped in premarket trading Friday after the maker of chips and circuits for electronics beat earnings forecasts for its fiscal fourth quarter and raised guidance for the current first quarter.

The company reported adjusted earnings of 11 cents a share on revenue of $971 million for the quarter ended March 31, beating Wall Street's consensus estimates of 10 cents and $963 million, respectively.

Microchip shares were up 8.8% to $53.48 before the bell Friday, buoyed by management's improved forecasts for the fiscal first quarter of 2026.

The company increased first-quarter revenue estimates to between $1.02 billion and $1.07 billion and raised earnings expectations to 26 cents a share from 18 cents.

The positive report "marks the bottom of this prolonged industry down cycle for Microchip," said CEO Steve Sanghi. The company's shares have fallen 46% over the last 12 months as of Thursday's close.

Analysts from Piper Sandler agreed with Sanghi's assessment, upgrading the stock to Buy from Hold, citing strong potential demand from Microchip's distributors.

"We think that MCHP could see substantial recovery and growth in a short period of time," the analysts wrote in a research note after the earnings release.

Not everyone was so optimistic. Analysts from Truist Securities said Microchip's current valuation wasn't compelling even if the company has hit bottom.

"Stay on the sidelines for now," the analysts wrote, as they maintained a Hold rating on the stock and bumped their price target to $52 from $43.

Write to Nate Wolf at nate.wolf@barrons.com

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May 09, 2025 08:20 ET (12:20 GMT)

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