Summit Downgrades to Hold; UBS Reiterates Top Pick By

© Reuters Micron (MU) Stock: Summit Downgrades to Hold; UBS Reiterates Top Pick

By Senad Karaahmetovic

Micron (NASDAQ:) shares are down over 4% in pre-market Monday after Summit Insights Group’s Kinngai Chan reduced the stock to Hold.

The expert “no longer expects the memory market dynamics to turn favorable in 2H22,” for this reason the downgrade to Hold.

Industry checks revealed “continued sluggishness in the smartphone” market, in addition to the ongoing decrease in the PC customer need.

“We are now seeing a slower than expected industry adoption of DDR5 which we believe will result in more pricing pressure for DRAM in the near to medium term. Our recent industry checks also indicate elevated memory inventories at Asian brokers, module houses and ODMs,” Chan informed customers in a note.

Moreover, the expert anticipates MU to experience gross margin headwinds in the 2nd half of the year.

On the other hand, UBS expert Timothy Arcuri restated a Buy ranking and cut the rate target to $115.00 per share from $120.00. The expert thinks the risk/reward is manipulated “meaningfully to the upside from these levels.” As such, Micron remains the Top Pick in the sector.

“We believe investors continue to overlook several key factors. First, although end market weakness in PC/smartphones is weighing somewhat on near term DRAM ASPs, we see very strong pricing support heading into C2023 as the industry growth in bit supply is set to compress significantly,” Arcuri composed.


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