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Microchip (MCHP) Expands SPE Solutions With LAN887x PHYs

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Microchip Technology (MCHP - Free Report) recently introduced its latest Single Pair Ethernet (SPE) solutions with the launch of the LAN887x Ethernet PHY transceiver family, designed to meet the growing connectivity demands in automotive, industrial, avionics, robotics and automation sectors. 

The new transceivers support network speeds ranging from 100 Mbps to 1000 Mbps over cable lengths up to 40 meters, offering enhanced flexibility and interoperability across various applications. 

Fully compliant with industry standards, such as IEEE 802.3bp and IEEE 802.3bw-2015, the LAN887x PHYs are built for reliability and performance in extreme environments. 

The solutions feature advanced diagnostics, power-saving technologies and compatibility with MCHP’s comprehensive range of microcontrollers, microprocessors, SoCs and Ethernet switches, making them an ideal solution for modern connectivity challenges.

 

Microchip’s Strong Portfolio Aids Prospect

The latest solution strengthens MCHP’s portfolio.

It is benefiting from consistent strength in its microcontroller business. In the first quarter of fiscal 2025, the company introduced the AVR DU family of 8-bit microcontrollers that feature integrated USB connectivity, enhanced security and improved power delivery over previous versions.

Microchip expanded its radiation-tolerant microcontroller portfolio with the 32-bit SAMD21RT Arm Cortex-M0+ MCU, tailored for aerospace and defense sectors.

Further enhancing its portfolio, Microchip recently expanded its TrustFLEX portfolio with the addition of ECC204, SHA104 and SHA105 CryptoAuthentication ICs to simplify and lower the cost of secure key provisioning for various applications.

In first-quarter fiscal 2025, MCHP introduced ECC608 TrustMANAGER with Kudelski IoT keySTREAM to offer cloud-based software as a service, enabling secure authentication, custom PKI and streamlined lifecycle management for IoT devices.

Despite MCHP’s robust portfolio, persistent inflationary pressures and high interest rates have resulted in a weak macro environment.

It experienced a significant inventory correction, which resulted in a 45.8% year-over-year decline in the top line to $1.24 billion in the fiscal first quarter. The distribution channels also reduced its inventory levels, which have negatively impacted the top line.

Microchip expects net sales to be $1.12-$1.18 billion for second-quarter fiscal 2025. Non-GAAP earnings are anticipated to be between 40 cents and 46 cents per share.

The Zacks Consensus Estimate for revenues is pegged at $1.15 billion, indicating a 48.92% year-over-year decline. The consensus mark for earnings is pegged at 45 cents per share, down by 14 cents in the past 30 days. The projection suggests a 72.22% year-over-year decline.

Zacks Rank & Stocks to Consider

Currently, MCHP carries a Zacks Rank #5 (Strong Sell).

The stock has declined 10.4% against the Zacks Computer and Technology sector’s growth of 20.7% in the year-to-date period.

Some better-ranked stocks in the broader technology sector are Arista Networks (ANET - Free Report) , Badger Meter (BMI - Free Report) and Daktronics (DAKT - Free Report) , each sporting a Zacks Rank #1(Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here

Arista Networks’ shares have appreciated 49.4% in the year-to-date period. The long-term earnings growth rate for ANET is pegged at 17.20%. 

Badger Meter’s shares have gained 31.8% in the year-to-date period. The long-term earnings growth rate for BMI is pegged at 17.91%.

Shares of Daktronics have surged 80.1% in the year-to-date period. The long-term earnings growth rate for DAKT is pegged at 30%.

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