Analyst Shaves Price Target For Micron And Western Digital To Reflect Industry Weakness

Analyst Shaves Price Target For Micron And Western Digital To Reflect Industry Weakness
  • Mizuho analyst Vijay Rakesh maintained Micron Technology Inc MU with a Neutral and lowered the price target from $52 to $50.
  • Rakesh maintains Western Digital Corp WDC with a Neutral and lowered the price target from $40 to $38.
  • While memory industry valuations have remained attractive and MU's wafer cuts should help, he believes memory trends near-term are weaker with China COVID restrictions, higher memory supplier inventories, and fab underutilization impacting margins. 
  • His recent checks into the supply chain show demand weak into 2023 with China COVID restrictions impacting retail traffic and logistics from Beijing to Shenzhen and Shanghai to Zhengzhou.
  • His check suggested inventory at Memory suppliers and Server and Hyperscale customers higher (>8-14 weeks).
  • His checks also reflected pricing trending as unfavorable.
  • He saw fab underutilization as an added headwind to margins.
  • As he looks ahead to Micron earnings on December 21, he believes lower ASPs for memory could further pressure the gross margin at MU and WDC in the near term.
  • Price Action: MU shares traded lower by 1.47% at $54.31 on the last check Wednesday. WDC shares traded lower by 4.34% at $34.55.

Posted In: BriefsNewsPrice TargetReiterationAnalyst RatingsTech