BUZZ - Microchip shares plunge due to weak margin outlook, underperforming the semiconductor sector

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November 6 - ** Shares of US semiconductor supplier Microchip MCHP.O fell 5% to $61, poised to post the steepest one-day drop since July, as concerns over its profit margin outlook overshadowed a rebound in the overall semiconductor sector (link)

** The company on Thursday forecast (link) a third quarter gross margin between 64% and 65%, below the analysts’ average estimate of 66.2%—data compiled by LSEG

** CEO Steve Sanghi said supply constraints are limiting the company’s outlook, as bottlenecks at foundries, packaging and testing partners, as well as in internal operations, have led to some orders not being fulfilled

** At least three brokerages have cut their target price; JPMorgan lowered its target from $120 to $100, stating that despite strong demand, supply limitations and rising costs are curbing the expansion of gross margins

**Out of 27 analysts, 14 rate the stock as a “Buy”, 7 as a “Strong Buy,” and 6 as a “Hold”; the median target price is $88—LSEG

** As of the previous trading day’s close, the stock has risen 4% year to date

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