Micron Downgraded on Weaker Outlook for Data-Center Chips

Micron was downgraded to market perform at BMO, which said analyst estimates for the chipmaker don't reflect a weaker pricing environment.
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Semiconductor maker Micron Technology  (MU) - Get Report was downgraded at BMO Capital Markets to market perform from outperform, with its price target cut to $55 from $60.

BMO analyst Ambrish Srivastava wrote in a commentary that he acted because the environment for data-center memory chips has worsened over the past few months, MarketWatch reports.

And he expects that dynamic to last at least for the next two to three quarters.

“While investors have been concerned about over-ordering and inventory build in the data-center market, consensus estimates are not reflective of the weaker pricing environment," he said.

"We are hearing of orders being readjusted lower in the hyperscale market, as they relate largely to memory, with more of the readjustments lower being directed toward the DRAM [dynamic random-access memory] market."

Nonetheless, many analysts are bullish on Micron, with Bloomberg showing 26 buys, seven holds and one sell.

Wells Fargo analyst Aaron Rakers last week lifted his share-price target to $65 from $55, affirming his overweight rating.

He wrote in a commentary that concerns the company is slumping are "overdone," according to Seeking Alpha. His industry checks "point to only a moderate (one-to two-week) server DRAM inventory build."

Rakers holds a "continued positive view on overall server DRAM content growth" and discerns "continued signs of a smartphone recovery."

Micron shares recently traded at $49.76, down 2.7%. The stock has jumped 40% in the past three months, compared with 36% for the S&P 500 index and 45% for the Nasdaq 100 index during that period.