Micron Inventory Slumps Right after Downgrade. Why the Analyst Fears the Purchaser.

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Micron Technological know-how

stock was slumping Friday immediately after the memory chip maker acquired the initial Sell-equal rating since February.

Piper Sandler analyst Harsh Kumar downgraded Micron (ticker:

MU

) to Underweight from Neutral on Friday, citing concerns around the company’s oversize publicity to client marketplaces that will wrestle amid macroeconomic uncertainty. Kumar also reduced his price tag target to $70 from $90.

“With the world-wide financial system anticipated to facial area headwinds, we are involved about Micron’s a lot more than 50% exposure to consumer-like marketplaces these as PCs, cellular, and other,” he wrote in a exploration note Friday. “In addition, the exposure is a great deal greater than the vast majority of our semiconductor coverage.”

The corporation also has exposure to the automotive market place, which also will be affected by macroeconomic headwinds, he included.

It does not assist that around the past months charges have declined in the dynamic random obtain memory (DRAM) agreement sector, which could speed up as purchaser paying stalls, Kumar wrote. If demand from customers continues to weaken, Micron could see pressure on pricing that “could be harmful to earnings,” he additional.

Kumar’s bearish get isn’t presently the norm on Wall Avenue. It is the very first Provide-equivalent score for Micron considering the fact that February, in accordance to FactSet. At this time, 89% of analysts level the stock a Invest in or Overweight, while 8.3% amount it a Hold. In April, Barron’s produced the case that Micron was a get supplied its small valuations in comparison with peers and rising desire for memory chips in the prolonged operate.

Micron shares have been down 7.1% to $69.99 on Friday. The stock has missing 24% this 12 months.

Create to Sabrina Escobar at [email protected]