Morgan Stanley lowers Microchip Technology Incorporated (MCHP.US) target price to $39 but says market concerns are "exaggerated".

Morgan Stanley analyst Joseph Moore released a research report, maintaining a "hold" rating on Microchip Technology Incorporated (MCHP.US), but lowering the target price from $53 to $39. Moore believes that market concerns about Microchip Technology Incorporated have been "exaggerated". In discussing new CEO Steve Sanghi's 9-point restructuring plan, Moore stated that the semiconductor company faces "opportunities". However, the company will need to find a way to increase revenue and cut costs, which may not be an easy task. Moore said, "We do believe that Steve Sanghi is undervalued, and despite revenue facing headwinds, we still maintain a hold rating on the company. We think some concerns surrounding the company have been exaggerated, including gross margins and the balance sheet, so there is opportunity for the company, but the biggest variable is revenue growth, as a cyclical recovery will leverage earnings per share and alleviate balance sheet concerns." Moore mentioned that the company must overcome "significant hurdles" including intensifying micro competition, macro uncertainty, and regaining customer trust. Moore believes that if macro uncertainty subsides, the microcontroller market may enter an upswing cycle, leading to a potential upgrade in Microchip Technology Incorporated's rating. Microchip Technology Incorporated rose 2.3% on Monday, closing at $39.43. The stock has fallen over 30% so far this year.