MCHP
Microchip Technology Incorporated
$75.55
Platform & Compounding FCF
80%
Two-stage FCF DCF
Moderate
·
Conviction
Overvalued
Trading 16.9% above fair value
You pay
$75.55
Bear
$49.37
Fair
$64.62
Bull
$78.79
Bear
$49.37
-34.7%
5% stage 1 growth, 12% discount
Fair
$64.62
-14.5%
8% stage 1 growth, 12% discount
Bull
$78.79
+4.3%
10% stage 1 growth, 12% discount
Adjust Assumptions
8.0%
12.0%
3.0%
Key Value Driver
FCF growth rate (8% base case)
Terminal Value % of EV
33%
Implied Market Multiple
18.8x
Market is pricing in (growth)
10.0%
vs 8.1% base
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (46 analysts)
$110.50
Divergence from AlphaVal
42%
Summary
Using a two-stage FCF DCF with 8% growth decelerating over 15 years, discounted at 12%, the base-case intrinsic value is $64.62 per share.
Warnings
Stock-based employee pay equals 126% of profits. This dilutes existing shareholders, so cash flow alone overstates what owners really earn.
Wall Street's average price target is $110.50 (from 46 analysts). Our estimate is 42% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions