Microchip Technology (NASDAQ:MCHP) shares rallied 6.8% in Wednesday's session, reaching a level of approximately $81.33 as investors reacted to a bullish turn from Bank of America Securities.
Analysts at the firm upgraded the stock from "Neutral" to "Buy" and aggressively raised their price objective to $95 from $78, suggesting more than 25% upside from the previous close.
The upgrade centers on the "earnings leverage" inherent in Microchip’s business model as the industrial sector begins to stabilize.
With nearly 50% of its revenue linked to industrial end markets, Microchip is positioned to benefit disproportionately from a recovery in factory automation and infrastructure.
Beyond industrial demand, the broker highlighted strengthening tailwinds from the data center, aerospace, and automotive sectors—markets that are increasingly reliant on the company’s embedded control and analog solutions.
Reflecting this renewed confidence, Bank of America upwardly revised its 2026 and 2027 earnings estimates for the company by 8% and 13%, respectively.
The call comes at a pivotal time for the Chandler, Arizona-based company; earlier this month, CEO Steve Sanghi noted that inventory corrections in the distribution channel were progressing well, leading the company to raise its fiscal third-quarter sales guidance to approximately $1.19 billion.