Micron Technology‘s inventory acquired a uncommon “underweight” score from a brokerage because of the memory-chip maker’s heavy publicity to mobiles and PCs at a time when rising inflation forces shoppers to rein in spending.
Micron shares had been down about 6% at $71.18 in early buying and selling on Friday.
“With the worldwide financial system anticipated to face headwinds, we’re involved about Micron’s greater than 50% publicity to consumer-like markets corresponding to PCs, cell, and different,” Piper Sandler wrote in a word to shoppers.
The brokerage additionally expects the corporate’s chip enterprise that caters to the auto trade to undergo attributable to rising charges, a slowing financial system, and the potential of an extra stock construct.
Piper Sandler added that the Dynamic Random Entry Reminiscence (DRAM) market, which represents over 70% of the corporate’s complete income, had already began to see worth declines for many configurations.
Micron’s DRAM chips are extensively utilized in information centres, private computer systems and different units.
Market analysis agency Counterpoint reported in April that world PC shipments had been down 4.3% within the first quarter of 2022, because the warfare in Ukraine and China’s lockdowns pressured already fragile provide chains and added to shortages of parts.
International smartphone shipments are anticipated to say no 3.5% this yr, in response to IDC.
“Whereas we do really feel the corporate has carried out an impressive job to cut back its value construction and stay financially disciplined, we proceed to view reminiscence as largely a commodity market in comparison with the remainder of our universe. Consequently, we do really feel Micron is prone to underperform,” Piper Sandler stated.
The brokerage, nonetheless, expressed confidence within the firm’s information centre enterprise, which represents lower than 30% of income.
It minimize Micron’s worth goal by $20 to $70.
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