Microchip Technology Incorporated [NASDAQ: MCHP] price surged by 2.72 percent to reach at $3.47. The company report on November 20, 2020 that Microchip Technology Incorporated Announces Private Placement of $609 Million Principal Amount of 0.125% Convertible Subordinated Notes Due 2024 and Related Exchange Transactions.
(NASDAQ: MCHP) – Microchip Technology Incorporated (“Microchip”) announced that it has entered into privately negotiated exchange agreements with certain holders of its outstanding 1.625% Convertible Senior Subordinated Notes due 2025 (the “2025 Notes”), 1.625% Convertible Senior Notes due 2027 (the “2027 Notes”) and 2.250% Convertible Junior Subordinated Notes due 2037 (the “2037 Notes” and, together with the 2025 Notes and the 2027 Notes, collectively, the “Existing Notes”) pursuant to which Microchip will issue, deliver and pay, as the case may be, an aggregate of (a) $609.0 million principal amount of 0.125% Convertible Subordinated Notes due 2024 (the “New Notes”); (b) a certain number of shares of Microchip’s common stock based on the reference price (as defined below) and (c) approximately $421.0 million in cash, collectively, in exchange for approximately $90.0 million principal amount of the 2025 Notes, approximately $532.3 million principal amount of the 2027 Notes and approximately $407.7 million principal amount of the 2037 Notes (the “Exchange Transactions”), in each case, pursuant to exemptions from registration under the Securities Act of 1933, as amended (the “Securities Act”), and the rules and regulations thereunder. The actual amounts of cash to be paid and shares of common stock to be issued are subject to adjustment during a one-day measurement period ending November 20, 2020, which may be extended upon certain events, and could vary substantially depending on changes in the trading price of the common stock during such period.
Following the closing of the Exchange Transactions, $222.4 million in aggregate principal amount of 2025 Notes will remain outstanding, $512.0 million in aggregate principal amount of 2027 Notes will remain outstanding and $278.6 million in aggregate principal amount of 2037 Notes will remain outstanding, in each case, with their terms unchanged. The Exchange Transactions are expected to close concurrently on or about December 1, 2020, subject to customary closing conditions. The New Notes will represent senior subordinated obligations of Microchip that will be subordinated to Microchip’s senior debt and will pay interest semi-annually in arrears on each May 15 and November 15, commencing on May 15, 2021, at a rate of 0.125% per annum. The New Notes will mature on November 15, 2024, unless earlier converted, redeemed or repurchased. Prior to the close of business on the business day immediately preceding August 15, 2024, the New Notes will be convertible at the option of holders only upon the satisfaction of certain conditions and during certain periods. On or after August 15, 2024 until close of business on the second scheduled trading day preceding maturity, the New Notes will be convertible at the option of the holders at any time regardless of these conditions. The New Notes will be convertible into cash, shares of Microchip’s common stock or a combination of cash and shares of Microchip’s common stock, at Microchip’s election. The initial conversion rate of the New Notes will be determined using a conversion premium of approximately 40% above the 10b-18 volume weighted average price per share of Microchip’s common stock during a one-day measurement period ending November 20, 2020 (the “reference price”), which may be extended upon certain events, and will be subject to customary anti-dilution adjustments. On or after November 20, 2022, Microchip may redeem for cash all or any portion of the New Notes if the last reported sale price of Microchip’s common stock has been at least 130% of the conversion price for the New Notes for at least 20 trading days during any 30 consecutive trading day period.
A sum of 6527830 shares traded at recent session while its average daily volume was at 1.82M shares. Microchip Technology Incorporated shares reached a high of $135.29 and dropped to a low of $129.3572 until finishing in the latest session at $130.98.
The one-year MCHP stock forecast points to a potential upside of 3.83. The average equity rating for MCHP stock is currently 2.00, trading closer to a bullish pattern in the stock market.
Guru’s Opinion on Microchip Technology Incorporated [MCHP]:
Based on careful and fact-backed analyses by Wall Street experts, the current consensus on the target price for MCHP shares is $136.19 per share. Analysis on target price and performance of stocks is usually carefully studied by market experts, and the current Wall Street consensus on MCHP stock is a recommendation set at 2.00. This rating represents a strong Buy recommendation, on the scale from 1 to 5, where 5 would mean strong sell, 4 represents Sell, 3 is Hold, and 2 indicates Buy.
Cowen have made an estimate for Microchip Technology Incorporated shares, keeping their opinion on the stock as Market Perform, with their previous recommendation back on November 06, 2020. While these analysts kept the previous recommendation, B. Riley Securities raised their target price from $130 to $145. The new note on the price target was released on November 06, 2020, representing the official price target for Microchip Technology Incorporated stock. Previously, the target price had yet another raise from $128 to $134, while Citigroup kept a Neutral rating on MCHP stock.
The Average True Range (ATR) for Microchip Technology Incorporated is set at 4.32, with the Price to Sales ratio for MCHP stock in the period of the last 12 months amounting to 6.34. The Price to Book ratio for the last quarter was 6.16, with the Price to Cash per share for the same quarter was set at 1.46. Price to Free Cash Flow for MCHP in the course of the last twelve months was 25.12 with Quick ratio for the last quarter at 0.70.
MCHP Stock Performance Analysis:
Microchip Technology Incorporated [MCHP] gain into the green zone at the end of the last week, gaining into a positive trend and gaining by 3.83. With this latest performance, MCHP shares gained by 16.41% in over the last four-week period, additionally plugging by 39.56% over the last 6 months – not to mention a rise of 43.93% in the past year of trading.
Overbought and oversold stocks can be easily traced with the Relative Strength Index (RSI), where an RSI result of over 70 would be overbought, and any rate below 30 would indicate oversold conditions. An RSI rate of 50 would represent a neutral market momentum. The current RSI for MCHP stock in for the last two-week period is set at 67.89, with the RSI for the last a single of trading hit 68.24, and the three-weeks RSI is set at 64.94 for Microchip Technology Incorporated [MCHP]. The present Moving Average for the last 50 days of trading for this stock 111.17, while it was recorded at 128.07 for the last single week of trading, and 98.17 for the last 200 days.
Insight into Microchip Technology Incorporated Fundamentals:
Operating Margin for any stock indicates how profitable investing would be, and Microchip Technology Incorporated [MCHP] shares currently have an operating margin of +13.15 and a Gross Margin at +42.63. Microchip Technology Incorporated’s Net Margin is presently recorded at +10.82.
Return on Total Capital for MCHP is now 4.50, given the latest momentum, and Return on Invested Capital for the company is 3.96. Return on Equity for this stock inclined to 10.50, with Return on Assets sitting at 3.19. When it comes to the capital structure of this company, Microchip Technology Incorporated [MCHP] has a Total Debt to Total Equity ratio set at 172.26. Additionally, MCHP Total Debt to Total Capital is recorded at 63.27, with Total Debt to Total Assets ending up at 55.21. Long-Term Debt to Equity for the company is recorded at 160.56, with the Long-Term Debt to Total Capital now at 58.97.
Reflecting on the efficiency of the workforce at the company, Microchip Technology Incorporated [MCHP] managed to generate an average of $31,700 per employee. Receivables Turnover for the company is 5.81 with a Total Asset Turnover recorded at a value of 0.29.Microchip Technology Incorporated’s liquidity data is similarly interesting compelling, with a Quick Ratio of 0.70 and a Current Ratio set at 1.10.
MCHP Stock EPS
With the latest financial reports released by the company, Microchip Technology Incorporated posted 1.32/share EPS, while the average EPS was predicted by analysts to be reported at 1.26/share. When compared, the two values demonstrate that the company surpassed the estimates by a Surprise Factor of 4.80%. The progress of the company may be observed through the prism of EPS growth rate, while Wall Street analysts are focusing on predicting the 5-year EPS growth rate for MCHP. When it comes to the mentioned value, analysts are expecting to see the 5-year EPS growth rate for Microchip Technology Incorporated go to 10.10%.
Microchip Technology Incorporated [MCHP] Insider Position Details
There are presently around $32,471 million, or 96.40% of MCHP stock, in the hands of institutional investors. The top three institutional holders of MCHP stocks are: VANGUARD GROUP INC with ownership of 29,346,065, which is approximately 0.603% of the company’s market cap and around 2.07% of the total institutional ownership; DODGE & COX, holding 20,751,913 shares of the stock with an approximate value of $2.72 billion in MCHP stocks shares; and BLACKROCK INC., currently with $2.59 billion in MCHP stock with ownership of nearly 3.706% of the company’s market capitalization.
Positions in Microchip Technology Incorporated stocks held by institutional investors increased at the end of November and at the time of the November reporting period, where 387 institutional holders increased their position in Microchip Technology Incorporated [NASDAQ:MCHP] by around 12,207,235 shares. Additionally, 349 investors decreased positions by around 14,902,367 shares, while 150 investors held positions by with 220,802,230 shares. The mentioned changes placed institutional holdings at 247,911,832 shares, according to the latest SEC report filing. MCHP stock had 99 new institutional investments in for a total of 2,115,907 shares, while 67 institutional investors sold positions of 2,688,771 shares during the same period.