UPDATE: Goldman Sachs Upgrades Microchip Technology to Neutral on Valuation

Goldman Sachs raised its rating on Microchip Technology (NASDAQ: MCHP) from Sell to Neutral with a $29 price target.

Goldman Sachs said, "We upgrade Microchip to Neutral from Sell. Recall we were Sell-rated as we believed MCHP traded at an unwarranted premium to the group. We believe valuation is now reasonable as Microchip's multiple has compressed through the year: MCHP now trades at 18X our CY13 EPS vs. peers at 17X vs. a 35% premium on CY12 EPS at the time of our downgrade. We believe this multiple compression has been driven by investors rotating into names with better valuation/return profiles. Since our downgrade, on January 2, 2012 MCHP is down 14% vs. the S&P up 14% and the SOX up 7% (12 months: MCHP is -9% vs. the S&P +16% and the SOX +7%)."

Microchip Technology closed at $31.70 on Wednesday.

(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.