Microchip rises as Stifel upgrades, citing relative underperformance in current market
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Microchip Technology (NASDAQ:MCHP) shares rose on Tuesday as investment firm Stifel upgraded the semiconductor company, citing the stock's relative underperformance in recent months.
Analyst Tore Svanberg moved the firm's rating on Microchip Technology (MCHP) to buy from hold and raised the per-share price target to $75 from $70, noting that shares have fallen 31% since January 4, while other stocks such as Texas Instruments (TXN), NXP Semiconductor (NXPI), Analog Devices (ADI) and ON Semiconductor (ON) have fallen less. 
"Interestingly, when compared to the 2008 crisis, while [Microchip] remains a more defensive name having proved more resilient at -54% returns (vs. -60% large-cap returns on average), it appears that now [Microchip] is relatively underperforming in the current environment," Svanberg wrote in a note to clients. 
Microchip Technology (MCHP) shares rose nearly 2.5% to $62.13 in early trading.
In addition, Svanberg noted that the price-to-earnings multiple on Microchip is below 10 at 9.8, near the lowest it has been in five years. For comparison purposes, the stock has traded at an average earnings multiple of 15 over the past five years.
"With the stock trading at an attractive P/E (while recognizing P/E is less of a reliable valuation metric when the macroeconomic environment is deteriorating), [Microchip] is getting very close to a [near-term] trough," Svanberg added, while pointing out the company's growth prospects over the next 12 months look "resilient."
Analysts have been positive on Microchip's stock (MCHP). It had an average rating of BUY from Wall Street analysts, while Seeking Alpha authors are more positive on it and rate it a strong BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, rated MCHP a
BUY.