Micron double downgraded to Underperform by BNP Paribas

BNP Paribas issued a double downgrade on Micron Technology (MU), now rating the stock at Underperform and slashing its price target to $67 from $140 per share.

Market Domination's Julie Hyman and Josh Lipton examine the analyst call on the chip and memory hardware developer.

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This post was written by Luke Carberry Mogan.

Video Transcript

Mike Ron, analyst at B and P Pa. Bass.

They go bold.

They go very broad, the double downgrade.

You know, that excites me.

You know, that is from out perform to underperform.

So forget neutral.

They fly right past neutral.

We're going right to sell.

This is the only analyst, I think with AC on this thing.

By the way, they cut the target to what Bloomberg says is actually a street low.

They go to 67.

What is the issue?

What is all this scepticism you're asking?

Analyst says Mike is gonna underperform a IP to 25.

They talk about capacity, oversupply of HBM high bandwidth memory chips.

And that's gonna mean a faster than expected market correction of those D ra MA SPS average selling prices.

Uh, the stock is basically now flat year to date, but the analyst says, still, risk reward not good.

You know, this is something that we have talked about periodically when we talk about the chips in the A I cycle, which is that chips?

Historically, semiconductors historically particularly memory are commodity business move in cycles, sort of boom and bust.

Too much supply, not enough supply.

The prices fluctuate based on that and that A I doesn't make the industry necessarily immune from those traditional cycles.

So that seems to be what's going on here.

Uh, with this memory.

Also, the analysts, they are saying the current, um, average selling price up cycle is going in the November quarter, which is soon, obviously.

And so they say, Why don't we just neutral?

Why are we going to an under Why are we skipping right through neutral and going to underperform?

Because the stock is already down so much, So why not just go neutral?

So basically, they say, when looking at the history of these types of memory average selling prices and their relationship to the company's tangible book value, they say there is still downside risk here because of what they see as this near term peak in prices.

You're gonna hear from the company very soon, By the way, reporting earnings Q four print hot off the press is September 25th.

Yes, we will be watching this closely