Micron Technology’s inventory obtained a uncommon “underweight” score from a brokerage due to the memory-chip maker’s heavy publicity to mobiles and PCs at a time when rising inflation forces customers to rein in spending.
Micron shares had been down about 6 % at $71.18 (roughly Rs. 5,530) in early buying and selling on Friday.
“With the global economy expected to face headwinds, we are concerned about Micron’s more than 50 percent exposure to consumer-like markets such as PCs, mobile, and other,” Piper Sandler wrote in a observe to purchasers.
The brokerage additionally expects the corporate’s chip enterprise that caters to the auto trade to undergo due to rising charges, a slowing financial system, and the opportunity of an extra stock construct.
Piper Sandler added that the Dynamic Random Access Memory (DRAM) market, which represents over 70 % of the corporate’s whole income, had already began to see value declines for many configurations.
Micron’s DRAM chips are broadly utilized in information centres, private computer systems and different gadgets.
Market analysis agency Counterpoint reported in April that world PC shipments had been down 4.3 % within the first quarter of 2022, as the conflict in Ukraine and China’s lockdowns pressured already fragile provide chains and added to shortages of parts.
Global smartphone shipments are anticipated to decline 3.5 % this 12 months, in accordance to IDC.
“While we do feel the company has done an outstanding job to reduce its cost structure and remain financially disciplined, we continue to view memory as largely a commodity market compared to the rest of our universe. As a result, we do feel Micron is likely to underperform,” Piper Sandler mentioned.
The brokerage, nevertheless, expressed confidence within the firm’s information centre enterprise, which represents lower than 30 % of income.
It minimize Micron’s value goal by $20 (roughly Rs. 1,550) to $70 (roughly Rs. 5,440).
© Thomson Reuters 2022