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Microchip Down as Trump Policies Spell Doom for Technology
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Microchip Technology Inc (MCHP - Free Report) was the worst performing S&P 500 stock on Dec 1. Shares of the chip-maker fell almost 7.5% in the last trading session that saw a significant slide in technology stocks particularly semiconductors and software.
Overall, tech-laden NASDAQ Composite fell 1.36%, due to weakness in semiconductor as well as 2.8%, 1.8% and 0.9% decline in share prices of Facebook , Microsoft (MSFT - Free Report) and Apple (AAPL - Free Report) , respectively. Per Reuters, S&P 500 technology index had its worst day since August.
We also note that Microchip has not been performing well in the recent times. Since, its second-quarter fiscal results was released on Nov 7, the stock price has declined 1.61% as compared with the Zacks Electronic Semiconductor industry’s gain of 4.72%.
Technology Slump: Trump Impact
The slump reflects growing uncertainty and lack of visibility over Trump administration’s economic policy and its impact on the technology sector. During his election campaign days, Donald Trump had threatened to force technology companies to bring their overseas manufacturing operations back to the U.S.
The recent Carrier fiasco – where the heating and air-conditioning company had to partially backtrack in its decision to outsource manufacturing jobs from Indiana to Mexico – will definitely create panic among technology investors.
Moreover, Trump’s views over trade protectionism and unfavourable immigration policy are some of the other headwinds for the U.S. technology companies.
Microchip: Microcontroller Key Catalyst
Although the impact from Trump’s policies is likely to remain an overhang on technology companies like Microchip, we believe that strong demand for microcontroller products will drive the company’s results going ahead.
Most recently, Microchip raised its third-quarter fiscal 2017 guidance and also stated that it is on track to achieve long-term operating margin target of 33% fourth-quarter 2018. The company is expanding its touch business beyond handsets and tablets into areas, such as automotive industrial applications, which is positive in our view.
This is further expected to drive top-line growth in the rest of fiscal 2017. Moreover, stringent cost control is a catalyst for operating margin expansion. (Read More: Microchip Raises Q3 View, On Track with Long-Term Target)
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Microchip Down as Trump Policies Spell Doom for Technology
Microchip Technology Inc (MCHP - Free Report) was the worst performing S&P 500 stock on Dec 1. Shares of the chip-maker fell almost 7.5% in the last trading session that saw a significant slide in technology stocks particularly semiconductors and software.
Overall, tech-laden NASDAQ Composite fell 1.36%, due to weakness in semiconductor as well as 2.8%, 1.8% and 0.9% decline in share prices of Facebook , Microsoft (MSFT - Free Report) and Apple (AAPL - Free Report) , respectively. Per Reuters, S&P 500 technology index had its worst day since August.
We also note that Microchip has not been performing well in the recent times. Since, its second-quarter fiscal results was released on Nov 7, the stock price has declined 1.61% as compared with the Zacks Electronic Semiconductor industry’s gain of 4.72%.
Technology Slump: Trump Impact
The slump reflects growing uncertainty and lack of visibility over Trump administration’s economic policy and its impact on the technology sector. During his election campaign days, Donald Trump had threatened to force technology companies to bring their overseas manufacturing operations back to the U.S.
The recent Carrier fiasco – where the heating and air-conditioning company had to partially backtrack in its decision to outsource manufacturing jobs from Indiana to Mexico – will definitely create panic among technology investors.
Moreover, Trump’s views over trade protectionism and unfavourable immigration policy are some of the other headwinds for the U.S. technology companies.
Microchip: Microcontroller Key Catalyst
Although the impact from Trump’s policies is likely to remain an overhang on technology companies like Microchip, we believe that strong demand for microcontroller products will drive the company’s results going ahead.
MICROCHIP TECH Price and Consensus
MICROCHIP TECH Price and Consensus | MICROCHIP TECH Quote
Most recently, Microchip raised its third-quarter fiscal 2017 guidance and also stated that it is on track to achieve long-term operating margin target of 33% fourth-quarter 2018. The company is expanding its touch business beyond handsets and tablets into areas, such as automotive industrial applications, which is positive in our view.
This is further expected to drive top-line growth in the rest of fiscal 2017. Moreover, stringent cost control is a catalyst for operating margin expansion. (Read More: Microchip Raises Q3 View, On Track with Long-Term Target)
Zacks Rank
Currently, Microchip sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>