Chipmaker Micron (NYSE: MU) is set to release its latest earnings on Wednesday.
MU – Daily Chart
The price of MU is trading close to the 2022 high of around $97.62. That will be the key price with the earnings release after the stock slumps in recent months.
Micron Technology has many analysts who are pessimistic about the chip maker’s management guidance for coming quarters. However, a Citi analyst still placed a Buy rating on the stock.
Citi analyst Christopher Danely wrote in a research note last week that he spent time chatting with investors about their expectations for Micron’s earnings, which he said were very pessimistic.
“We estimate roughly 80% of investors are bearish on Micron, with every hedge fund we spoke with being negative and a few mutual funds being positive,” Danely wrote.
Shares of Micron are up 4.7% this year, but they have recently taken a tumble. The stock is currently down around 40%, an all-time closing high of $153.45 in June. The shift in investor sentiment came after broader semiconductor stocks weakened as investors rotated their money away from technology stocks, competition increased in the sector, and geopolitical tensions increased.
The PHLX Semiconductor Index has dropped 14% from its 2024 closing high of 5,904.54 in July.
Other analysts have also recently come up with more pessimistic commentary regarding Micron. BNP Paribas analyst Karl Ackerman downgraded shares to Underperform from Outperform and slashed his price target to $67 from $140. He expects Micron to underperform compared to the sector in artificial-intelligence semiconductors through 2025. Ackerman said an oversupply of high bandwidth memory, or HBMs, would push down the average selling prices of the company’s memory chips.
Morgan Stanley analysts lowered their price target on Micron to $100 from $140 while maintaining Equal Weight. They also questioned Micron’s average selling price growth in the fourth and first quarters and expected the stock to “continue trading poorly unless that shows signs of reversing”.
However, they are still bullish on the stock, which trades 9.6 times earnings, significantly below its five-year average of 21 times. They said that the cheap valuation and the potential of increased AI demand for Micron’s products over time are reasons to buy the stock.
