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Micron plunges as Piper Sandler downgrades, cites ‘oversized exposure’ to consumer

Sundry Photography/iStock Editorial through Getty Pictures

Micron Engineering (NASDAQ:MU) shares fell 8% on Friday as expenditure agency Piper Sandler downgraded the memory chip maker, citing its “outsized publicity” to consumer electronics.

Analyst Severe Kumar decreased his rating on Micron (MU) shares to underweight from neutral and slashed his per-share rate focus on to $70 from $90, noting the company’s publicity to cellular, PCs and “other shopper finish-markets” are topic to weaker tendencies, even though the dynamic random obtain memory, or DRAM marketplace, of which the company gets 70% of its earnings from, has started off to see price declines.

NAND pricing, which Micron (MU) also has exposure to, has witnessed a deceleration in the past few months, Kumar additional.

“While we do truly feel the firm has performed an outstanding occupation to lower its cost framework and stay financially disciplined, we carry on to check out memory as mostly a commodity industry as opposed to the relaxation of our universe,” Kumar wrote in a notice to consumers.

“As a final result, we do experience Micron is probable to underperform, and we choose differentiated corporations with a lot less consumer publicity.”

Kumar pointed out that Micron’s (MU) exposure of better than 50% to customer marketplaces is higher than quite a few other semiconductor firms, and with some weakness in the mobile and Laptop marketplaces, it really is probably there could be “added stress on the firm.”

Micron (MU) is also not as uncovered to the automotive sector, which Kumar mentioned occasions like growing rates, a slowing macro and the possibility of excess stock may perhaps be a issue.

At present, the analyst is only confident in Micron’s (MU) facts centre business, which includes a lot less than 30% of its income.

On Thursday, it was documented that Taiwan Semiconductor (TSM) was wanting to improve its publicity to memory chip makers, together with Micron Know-how (MU).

Analysts have been overly bullish on Micron’s inventory (MU). It had an typical rating of Sturdy Buy from Wall Street analysts, and a slightly significantly less enthusiastic Buy from In search of Alpha authors. Conversely, Seeking Alpha’s quant method, which constantly beats the sector, rated Micron a Sturdy Buy.