Micron Know-how administration feedback have ‘damaging implications for all of semis,’ declare analysts By Investing.com

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By Sam Boughedda

Micron Know-how (NASDAQ:) shares tumbled Thursday after the memory-chip maker’s CFO mentioned at a Susquehanna investor convention that it might scale back its headcount by 15% this 12 months and cautioned that margins for the Could quarter will doubtless be worse than anticipated, doubtlessly resulting in stock writedowns.

As well as, administration indicated that fiscal third-quarter income could possibly be flat to down quarter-over-quarter.

“We proceed to anticipate bettering demand via the 12 months, however pricing tendencies stay difficult,” Micron Chief Monetary Officer Mark Murphy reportedly mentioned. “Consequently, we anticipate decrease margins in our fiscal [third quarter] than we beforehand anticipated.”

Micron shares are at the moment down greater than 3%.

Reacting to the feedback, Credit score Suisse analysts, who’ve an Outperform score and $66 worth goal on the inventory, mentioned they consider the softness is “doubtless tied to ongoing weak spot within the datacenter finish market, the place stock stays elevated.”

“Based mostly on commentary from others within the datacenter provide chain akin to , , and , cloud demand has slowed over the previous a number of months, which is probably going exacerbating the surplus reminiscence stock that already existed in datacenter,” wrote the analysts.

Lynx Fairness Methods analysts mentioned in a analysis notice that they “see draw back danger to MU’s fiscal 2023 WFE lower of greater than 50% y/y.”

“MU CFO’s remark clearly has damaging implications for all of semis,” mentioned the analysts. “We predict there’s substantial danger to the view of the typical semi firm of a pickup within the again half of the 12 months.”

Even so, they mentioned the agency expects MU shares to stabilize at present ranges.

Stifel maintained a Maintain score and $55 worth goal on Micron however mentioned they’re reducing estimates.

The agency’s stance relies on PC unit forecasts for CY23 additional softening, which might incrementally weigh on bit demand this 12 months, DRAM and NAND suppliers being sluggish to comply with via with manufacturing cuts, and the truth that establishing ASP leverage might stay difficult given elevated inventories.

“We stay cautious on reminiscence fundamentals this 12 months although preserve our Maintain score and $55 worth goal, which displays a modest premium to tangible e-book worth,” confirmed Stifel.

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