As previously reported, BofA/Merrill upgraded Microchip to Buy from Neutral and raised its price target to $75 from $63. Analyst Vivek Arya said Microchip's Q2 beat and raise address prior concerns regarding organic growth, synergies from the Atmel deal, and debt burden. He sees 20%+ upside potential driven by solid operating margin profitability of 30% moving towards 33%-35%, diverse spending exposure to industrial, autos, and infrastructure, consistent execution, free cash flow growth, and potential benefits from consolidation within the industry.

BofA raised the firm's price target on Texas Instruments (TXN) to $190 from $175 and keeps a Neutral rating on the shares. TI's small Q1 beat and inline but sequentially rising Q2 sales guidance, "while modest, potentially marks a recovery inflection in industrial chip demand," with positive read-across for U.S. peers such as Analog Devices (ADI), Microchip (MCHP), NXP Semiconductors (NXPI) and On Semiconductor (ON), the analyst tells investors. However, despite an expected recovery, TI's sustained high capex intensity could keep reported calendar year 2024-26 pro-forma EPS below $6 per share, the analyst added.

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