OK, one big item to talk about. Let's get to it.
Micron (MU) - Get Report shares were up 9.69% to $44.02 Thursday, the day after the chip maker beat earnings estimates. The real catalyst for the stock was that management said it will cut back on capital expenditures for 2019, moving its capex budgeted to a range between $9 billion and $9.5 billion from $10.5 billion. This will help the company support prices, which have fallen due to over production, which led to a supply glut. So, that stock rallied.
But the narrative out of sell-side analysts was that oversupply is still an issue going forward. Moreover, competitors in the semiconductor industry will put a lot of supply on the market, in turn, threatening Micron's pricing power, the analyst says. One bullish analyst from Cowen and company, with a $46 price target, 4.5% above the stock's current level, says there isn't really an inventory glut issue at all.
While Micron's chips saw an all-time high in "days in inventory" of 137 in its latest quarter (the three-year average is 98), "if we peel back the onion, however, the amount of 'finished' goods inventory is at the lowest level over the last 5-year period: FebQ stood at only 23 days vs. 27 days a year ago," said Karl Ackerman in a note out Thursday morning. Basically, Ackerman is saying Micron had far less inventory on the market than seen at first glance, as a lot of those counted products were unfinished. When finished, he said, they could be sold at a higher price later in the year.
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