Don’t expect shares of Micron Technology Inc (NASDAQ: MU) to recover any time soon, a Piper Sandler analyst said in a note on Friday. The stock is down nearly 30% from its year-to-date high.
Micron is overexposed to consumer markets
Harsh Kumar downgraded Micron to “underweight” this morning and slashed his price target to $70 a share, which is roughly where the stock is already trading right now.
He’s dovish on MU because the Boise-headquartered company has a relatively oversized exposure to the consumer markets, including mobile and personal computers. Its core DRAM business is also seeing price declines.
Price declines could accelerate as broader economy slows and consumer spending stalls. NAND pricing is also decelerating. Where demand curve shifts down, MU will continue to see pressure on pricing, which could be detrimental to earnings.
Bryn Talkington agrees with the call
Micron’s exposure to mobile, PCs and other consumer markets is estimated to be more than 50%, which, as per Requisite Capital’s Bryn Talkington, indeed is of concern. On CNBC’s “Halftime Report”, she said:
During COVID, everyone upgraded because we were at home and relied more on technology. So, I think it’s a good read through that we’ve already upgraded and the next couple of quarters or next year or so, you could just see lower demand.
Last week, however, Micron CEO Sanjay Mehrotra said fiscal 2022 will be a record revenue year for the semiconductor manufacturer. The stock currently trades at a PE multiple of 8.81.
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