Microchip Technology Inc. (NASDAQ:MCHP) — This maker of micro-controllers and analog and semiconductor products for a variety of applications was last reviewed by me on August 1. I recommended that the stock be purchased at $54 with a trading target at $62.
It achieved $62 on August 26 and went on to a new high at $63.11 on Sept 6, where it flashed a CBR Sell signal from my internal system.
On the way to a new high, buyers opened a “continuation gap” from $57.13 to $59.46. Continuation gaps are usually closed — in other words, look for MCHP stock’s price to fall to under $57.13, which also is this stock’s bullish support line.
MCHP is still rated a five-star buy from Standard & Poor’s — their highest evaluation — with a 12-month target of $70, recently raised from $59.
EPS was increased from a fiscal year 2017 estimate of $3.25 to $3.40 and for FY 2018 to $3.80 from $3.78. For the June quarter, EPS of 84 cents was reported, beating an estimate of 75 cents. Sales rose 49% from the March quarter.
Future growth is expected to be driven by the acquisition of Atmel and growth in the industrial and automotive areas.
MCHP is still a favored recommendation, and the recent market decline gives us an opportunity to purchase the stock at a price that is within its intermediate support line at the 20-day moving average ($61) and its bullish support line at $56. Thus, try to buy MCHP at $57 with a trading target of $64 for a projected trading return of over 12%.
