BofA Securities on Wednesday raised its recommendation on Microchip Technology (MCHP) from Neutral to Buy and boosted its target price to $95, up from $78. The revised target sits at the top end of the analyst target range for the stock, which spans from $60 to $95. At the time of the report, Microchip shares were trading at $75.16, close to a 52-week peak of $79.50.
The upgrade reflects BofA’s higher forward-profit expectations for the company. The firm increased its calendar-year 2026 and 2027 earnings-per-share estimates by 8% and 13%, respectively, to $2.36 for CY26 and $3.10 for CY27, citing what it described as stronger recovery momentum and improved visibility into Microchip’s business.
Market analysts appear to be warming to the chipmaker: data compiled ahead of the company’s next quarterly release on February 5 show 16 analysts have revised their earnings forecasts upward for the coming periods. That trend underpins the more constructive outlook from BofA.
BofA highlighted Microchip’s end-market diversification as a key strength. Roughly 48% of the company’s revenue is tied to industrial markets, with approximately 18% coming from aerospace and defense. The firm noted Microchip is likely the largest supplier of aerospace and defense chips, a position that supports stable, mission-critical demand.
Despite that exposure, Microchip has faced revenue pressure recently: trailing-12-month revenue is down 23.36%. Nevertheless, the company has continued to return cash to shareholders, maintaining dividend payments for 24 consecutive years and raising its dividend for 14 straight years, with the yield at 2.42% at the time of the report.
BofA also pointed to Microchip’s double-digit exposure to data centers, calling out products such as PCIe switches that the firm said are well-positioned for AI cluster deployments. That data-center positioning, combined with industrial and aerospace demand, was cited as a contributor to a strong total-shareholder return of 37.76% over the past year.
On profitability, BofA suggested there is room for margin recovery. The firm noted current EBIT margins of roughly 24-27% could move back toward prior peaks above 40%, assuming ongoing improvement in product gross margins and disciplined operations. In a longer-term scenario, BofA saw the possibility of Microchip achieving EPS nearer $4, compared with its CY27 estimate of $3.10.
Separately, an analysis flagged that Microchip appears overvalued relative to its calculated Fair Value at current market levels, while assigning the company a financial health score of "Fair." The analysis and BofA’s projections together present a mixed picture: upside from operating leverage and product positioning alongside valuation and recent revenue weakness.
Microchip has also moved to expand and diversify its product portfolio. The company extended its maXTouch M1 family of touchscreen controllers to cover a wider set of automotive displays, including emerging panel technologies such as OLED and microLED. In power-management, Microchip introduced a lineup of 600V gate drivers engineered for high-voltage applications, offered in multiple configurations and current-drive options.
In product developments aimed specifically at aerospace and defense, Microchip launched its JANPTX family of non-hermetic plastic Transient Voltage Suppressor devices, achieving a first in MIL-PRF-19500 military qualification for such a package. These components are designed to provide transient protection while presenting a lower-cost alternative to traditional, hermetic packages.
Other brokerages have echoed more positive stances. Stifel raised its price target to $90, pointing to diversified revenue streams and capabilities in high-performance analog and embedded computing. Piper Sandler moved its target to $85, citing improving order momentum in industrial markets and stabilization in automotive demand.
The combination of upgraded analyst estimates, expanded product offerings in automotive and power systems, and exposure to data-center AI infrastructure underpin the recent positive reassessment of Microchip. At the same time, the company faces the challenge of converting that positioning into consistent revenue growth after a significant year-over-year decline.