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Western Digital, Applied Materials Shares Fall Along With Micron

TheStreet.com Founder Jim Cramer said a downgrade of Micron was bad for all makers of dynamic random access memory chips.
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Semiconductor shares including Western Digital  (WDC) - Get Western Digital Corporation Report and Applied Materials  (AMAT) - Get Applied Materials, Inc. Report fell Thursday in sympathy with Micron Technology  (MU) - Get Micron Technology, Inc. (MU) Report, which was downgraded by Morgan Stanley.

TheStreet.com Founder Jim Cramer noted that the downgrade was bad for all makers of dynamic random access memory chips.

“Huge Morgan Stanley downgrade tonight of Micron,” he tweeted. “Really applies to all DRAMs but not beyond that. Still, will hurt.”

Micron shares were at last check off 7% at $69.78.

Western Digital stock recently traded at $61.44, down 7.9%; Applied Materials at $130.23, down 3.4%; and Lam Research  (LRCX) - Get Lam Research Corporation (LRCX) Report at $588.09, down 3.4%.

Last week, Morningstar analyst William Kerwin raised his fair-value estimate for Western Digital to $70 from $65, after its earnings report.

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“No-moat Western Digital blew through its top- and bottom-line guidance for its fiscal fourth quarter, and guided for an even better September quarter,” he wrote in a commentary.

“We’re modestly raising our fair-value estimate … to incorporate a better fiscal 2022 outlook, even as we expect demand to taper down in the back half of the fiscal year.”

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On the bright side, “Western is enjoying record demand for its mass capacity enterprise [hard-disk drives], driven by cloud customers’ capital expenditures, and also saw upside from the impact of Chia cryptocurrency in the quarter,” Kerwin said.

Morningstar analyst Abhinav Davuluri has a $125 fair value for Applied Materials.

He assigns the company a wide moat based on “intangible assets around equipment design expertise and research and development cost advantages required to compete for the business of leading-edge manufacturers.”