Shares of semiconductor producer Micron Technologies (MU - Get Report) fell on Thursday after the company received a downgrade from analysts at Morgan Stanley.

Citing a challenging inventory situation and "much too optimistic" future earnings expectations, Morgan Stanley analysts Joseph Moore and Craig Hettenbach downgraded Micron to underweight from equal weight and reduced their 12-month price target to $32 a share.

"We still see the longer-term range for the stock price $30 to $60, but see a much higher likelihood that we see low 30s before we see high 50s," the analysts said in a research note to clients on Thursday.

The analysts specifically pointed to climbing inventories for DRAM and other chips, which at the current pace is a "significant negative."

"We are frankly amazed that this has become a point of debate. Current inventory is future supply, and when there is excess supply, prices and margins go down," the analysts said. "There's just no way around that."

Shares of Micron were down 2.7% to $42.70 in trading Thursday. The current average target price among analysts surveyed by FactSet is $48.67.

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