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What happened
Actions of Micron Technology (NASDAQ: MU) Thursday afternoon, after publishing some reports of negative analysts. The memory chip manufacturer's stock recorded these dips around 11:00 am EDT. An hour later, Micron's shares had slightly recovered to 8.8%.
So what
The Baird analyst firm no longer calls Micron a "good idea," lowering its price target from $ 100 to $ 75 per share. That's still more than 40% above Micron's current prices, and Tristan Gerra, an analyst at Baird, still holds an "outperform" rating on the stock,
Meanwhile, Morgan Stanley's Asian technology team has confirmed that DRAM and NAND prices are about to fall.
"We have recently met with buyers and sellers of memory and we think the 4Q outlook for DRAM servers is worse than expected for the rest of the 3Q," said Shawn Kim, an analyst at Morgan Stanley.
Finally, Sidney Ho, an analyst at Deutsche Bank, agreed that the memory market could be on the rise, but also argued that the coming downturn already seems to have been embedded in stock prices. Deutsche also maintained its "Buy" rating intact with a stable target of $ 80.
Source of the image: Getty Images.
Now what
Micron is currently trading at 5 times earnings or 4.3 times forecast earnings, which reinforces the optimistic attitude of Deutsche Bank. At the same time, Micron shareholders never like to see unit prices drop in an imbalance between chip supply and market demand.
The next few months could be difficult, assuming the situation of excess supply intensifies. If you like to play market timing, which is not necessarily a good idea, it may be the right time to bail out Micron until the price cycle is rebounding.
Anders Bylund owns shares in Micron Technology. The Motley Fool has no position in the stocks mentioned. Motley Fool has a disclosure policy.
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