MCHP
Microchip Technology Incorporated
$78.86
Platform & Compounding FCF
80%
Two-stage FCF DCF
Mild
·
Conviction
Overvalued
Trading 5.8% above fair value
You pay
$78.86
Bear
$56.72
Fair
$74.53
Bull
$91.07
Bear
$56.72
-28.1%
5% stage 1 growth, 12% discount
Fair
$74.53
-5.5%
8% stage 1 growth, 12% discount
Bull
$91.07
+15.5%
10% stage 1 growth, 12% discount
Key Value Driver
FCF growth rate (8% base case)
Terminal Value % of EV
33%
Implied Market Multiple
21.1x
Market is pricing in (growth)
11.6%
vs 8.1% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $110.73 from 46 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $74.53 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 $110.73 (from 46 analysts). Our estimate is 47% 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