StockBeat – Micron Slips as Analysts Downplay Memory Price Pop

Investing News

© Reuters.

Investing.com – Micron (NASDAQ:) fell on Tuesday, even as UBS raised its price target on the chipmaker’s stock as analysts downplayed expectations that the recent pop in memory prices amid export restrictions on Korea would continue.

UBS maintained its neutral rating on Micron (NASDAQ:) and raised its price target to $47 from $37, though it tempered expectations by claiming 2020 would be a transition year unless gross margins in memory chips improve. Micron was down about 2.8% on the day.

The new UBS target is closer in line to the $42.86 consensus target among analysts polled by Investing.com. With the stock at about $43, the shares are up 36% this year.

“We get the near-term stock reaction to geopolitical (Japan/Korea) and competitor production issues, but given the historically strong correlation between the stock and gross margins, it is just hard to believe the stock is off to the races unless margins are snapping higher,” UBS said in a note.

Japan earlier this month imposed export restrictions on South Korea, which controls about 70% of the global market for dynamic random access memory (DRAM) and 50% for NAND flash memory.

The move prompted fears of supply shortage, boosting chip prices. But Morgan Stanley said it sees no long-term impact on DRAM pricing and thinks the 10% rise in spot pricing in the past week will prove short-lived.

Others on Wall Street went further, with Lynx Equity saying it was time to take profits on Micron (NASDAQ:) amid fears further headwinds in the chipmaker’s core memory business could see the stock retrace some of its 2019 gains.

The concerns about Micron (NASDAQ:) come just a month after the chipmaker drew praise from Wall Street following better-than-expected fiscal third-quarter earnings and an upbeat outlook on memory demand.

Micron said last month it still expected to see “healthy year-over-year growth” in global DRAM semiconductor demand, though admitted that further capex cuts would be needed in order to reach supply-demand balance in current inventories.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Articles You May Like

As cannabis industry grows, opportunities in testing rise
Your Cannabis Lab Results Don’t Mean S#$!T – Cannabis’ Dirty Little Secret
Best And Worst Q3 2019: Basic Materials ETFs And Mutual Funds
SoftBank plans to lend up to $20 billion to employees to invest in new fund: WSJ
Boris Johnson weighing late-August trip to Berlin and Paris