Micron Technology (MU) - Get Micron Technology, Inc. (MU) Report shares fell Thursday after Deutsche Bank analyst Sidney Ho downgraded the semiconductor company to hold from buy and slashed his share-price target 20% to $48 from $60.
Memory-chip makers face “tough quarters ahead,” he wrote in a commentary cited by Bloomberg.
Micron recently traded at $46.37, down 4.4%. The stock has slid 14% year to date. Meanwhile, the Nasdaq Composite index has jumped 24%.
"Extensive checks" of the supply chain after recent "lackluster guidance" from Western Digital (WDC) - Get Western Digital Corporation Report made him more pessimistic on the supply-demand dynamic for memory semiconductors in coming quarters, The Fly reports.
Inventory buildups for cloud-data-center customers “appear more acute than we originally anticipated,” Ho said, according to Bloomberg.
In other important areas demand is weakening, too, he said. It has “dropped off sharply since mid-June,” and “there remains significant macro uncertainty related to the covid pandemic,” Ho said.
He has lowered his Micron estimates to account for lower prices and expects analysts’ estimates to fall "sharply" from present levels.
In late June, Micron said inventories among some of its clients were high. But the company suggested the buildups were among mobile and automotive memory buyers, rather than cloud clients.
Last week, following a call with Micron execs, Mizuho analyst Vijay Rakesh reported Micron was still seeing strong cloud demand.
He added that the company has seen “some inventory builds at customers” and that some “normalization” is expected for data-center demand during the back half of the year.