Microchip Technology MCHP is scheduled to report its third-quarter fiscal 2025 results on Feb. 6.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Microchip revised the net sales view to $1.025 billion for the third quarter of fiscal 2025. The figure is closer to the lower end of its original guidance. Non-GAAP earnings are anticipated between 29 cents and 32 cents per share.

The Zacks Consensus Estimate for third-quarter fiscal 2025 revenues is pegged at $1.05 billion, indicating a decline of 40.42% from the year-ago quarter’s reported figure.

The consensus mark for fiscal third-quarter earnings is pegged at 28 cents per share, down by a penny over the past 30 days, suggesting a 74.07% year-over-year decline.

Microchip’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and met once, delivering an earnings surprise of 2.70%, on average.

Let us see how things have shaped up for the upcoming announcement:

Key Factors to Note

MCHP’s third-quarter fiscal 2025 performance is likely to have been impacted by rising inventory levels, which reached 247 days in the second quarter of fiscal 2025, up 10 days sequentially. The company anticipates further increases in inventory dollars and days during the quarter under review, putting pressure on profitability.

Microchip has been suffering from persistent macroeconomic weakness and limited visibility, particularly in the industrial and automotive markets. Declining demand across the automotive, industrial, IoT and communications sectors, especially in Europe and China, poses additional challenges.

Lower factory utilization amid weakened demand led to significant underutilization charges, pressuring the gross margin and the overall operating performance. These challenges are expected to have affected MCHP’s third-quarter fiscal 2025 results.

Despite these challenges, MCHP benefits from a diverse product portfolio and ongoing expansion into key segments, reinforcing its strong market presence and growth trajectory.

What Our Model Says

Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Microchip has an Earnings ESP of -8.63% and a Zacks Rank #5 (Strong Sell).

Stocks to Consider

Here are some companies worth considering, as our model shows that these have the right combination of elements to beat on earnings in their upcoming releases:

Impinj PI has an Earnings ESP of +1.41% and presently flaunts a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Impinj’s shares have gained 18% in the trailing 12 months. PI is set to report its fourth-quarter 2024 results on Feb. 5.

Twilio TWLO has an Earnings ESP of +3.28% and sports a Zacks Rank of #1 at present.

Twilio shares have soared 112.4% in the trailing 12 months. TWLO is set to report its fourth-quarter 2024 results on Feb. 13.

Lumentum LITE currently has an Earnings ESP of +17.01% and a Zacks Rank #2.

Lumentum shares have gained 55.5% in the trailing 12 months. LITE is set to report its second-quarter fiscal 2025 results on Feb. 6.

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Microchip Technology Incorporated (MCHP) : Free Stock Analysis Report

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Lumentum Holdings Inc. (LITE) : Free Stock Analysis Report

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