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Citigroup's Christopher Danely raised their price target on Microchip Technology (NASDAQ: MCHP) by 4% from $100 to $104 on 2024/05/07. The analyst maintained their Strong Buy rating on the stock.

Microchip Technology reported its Q4 and FY 2024 earnings on 2024/05/06.

Danely summarized the results by saying that:

• The quarter's results were in line with estimates, but management guided the Q1 2025 lower because "the inventory build is worse than expected."
• Management believes Q1 2025 will be the bottom, "given accelerating booking trends over the last three months."

Earnings Report

Microchip Technology reported:

For Q4 22024:

• EPS of $0.57, which was in line with the Zacks Consensus Estimate but down 65.2% from Q4 2023's $1.64.
• Revenue of $1.326, down 40.6% from Q4 2023's $2.233B.

For FY 2024:

• EPS of $4.92, down from FY 2023's $6.02.
• Revenue of $7.634B, down from FY 2023's $8.439B.

For Q1 2025, management guided:

• EPS of $0.48 to $0.56.
• Revenue of $1.22B to $1.26B.

President & CEO Ganesh Moorthy commented: "We experienced a major inventory correction in FY 2024, leading to a 9.5% decline in revenue to $7.6 B.

"Despite this, our resilient operating model and rapid adjustment to the adverse business environment enabled us to navigate these challenges to achieve a non-GAAP operating margin of 43.9%.

"We remained committed to our capital return program, returning $1.89B through dividends and share buybacks during FY 2024, up 15.4% from the prior year, and we are tracking towards achieving our goal of returning 100% of adjusted free cash flow to shareholders by the current fiscal year-end.

"We believe we are undershipping to end market demand as customers and channel partners continue to reduce inventory.

"This situation has required us to implement ongoing austerity measures, including taking actions to reduce factory utilization, that will persist into Q1 2025.

"Despite these challenges, our commitment to maintaining our competitive edge and positioning ourselves for future revenue growth remains steadfast.

"We continue to focus on innovation, as demonstrated by the significant product announcements and the two tactical acquisitions we made.

"These initiatives aim to expand our product portfolio and reinforce our leadership across the diverse end markets we serve, helping to ensure that we are well-prepared to capitalize on opportunities when market conditions improve."