Shares of Micron (MU) continued their downward spiral in trading on Thursday after the manufacturer of solid-state drives (SSDs) issued a weaker-than-expected forecast. This has resulted in many Wall Street analysts, including Bank of America analyst Vivek Arya, lowering their price targets and downgrading the stock.
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MU Issues Bleak Forecast
For the Fiscal second quarter, the company has projected adjusted earnings in the range of $1.33 to $1.53 per share – a huge miss compared to the $1.92 per share consensus estimate. Furthermore, revenue is expected to be between $7.7 billion and $8.1 billion, with the midpoint also significantly below the estimated $8.99 billion.
BofA Analyst Downgrades MU
Following the bleak forecast, top-rated Bank of America analyst Vivek Arya downgraded Micron to a Hold from a Buy and reduced his price target on the stock to $110 from $125. Explaining the rationale behind the downgrade, Arya stated that the weak PC and phone markets are driving down memory prices, particularly NAND gate. NAND gate is not-and (NAND) logic gate that produces a false output only if all its inputs are true.
Furthermore, Micron’s Fiscal Q2 revenue guidance of $7.9 billion fell short of the analyst’s estimate of $8.3 billion. Additionally, the company projected a gross margin of 38.5%, below the analyst’s forecast of 40%. Looking ahead, the company expects continued pricing pressure in the NAND segment to extend into Fiscal Q3.
Arya’s price target implies an upside potential of 27.4% from current levels.
Is MU a Good Stock to Buy?
Analysts remain bullish about MU stock, with a Strong Buy consensus rating based on 23 Buys and one Hold. Over the past year, MU has increased by more than 5%, and the average MU price target of $153.05 implies an upside potential of 74.7% from current levels.
