Shelter At Home Expectations May Have Been Overdone For Micron

Shares of Micron Technology have been key to seeing how COVID sentiment is rippling through the tech space as analysts are now speculating that the memory market may have been oversupplied in a rush to fulfill projected infrastructure demands in the wake of the stay-at-home trend.

The latest blow to the stock came on Tuesday when BMO Capital analyst Ambrish Srivastava downgraded Micron from outperform to market perform, while also cutting his price target on the stock to $55 from $60 a share.

Micron shares traded as low as $49.57 a share Tuesday, closing the session at $49.90 for a loss of 2.6% on the day. Meanwhile the PHLX Semiconductor Index was up 0.2%, the S&P 500 index advanced 0.4%, and the tech-heavy Nasdaq Composite Index rose 0.7%.

Micron specializes in both NAND and DRAM memory chips, with the former being flash memory chips used in USB drives and smaller appliances, while the latter is commonly used in personal computers and data center servers.

Srivastava said DRAM memory prices look like they’ve been dropping over the past 2-3 months as data center demand decelerates. Srivastava said he doesn’t feel like this drop in pricing for DRAM is a quarterly phenomena. Instead he is downgrading Micron in the belief that the weaker memory pricing is here to stay.

As of late May Micron management boosted their fiscal third quarter guidance, indicating Micron management is expecting a strong quarter. That gives investors a choice – sell Micron on the word of analysts, or buy more on this dip and expect a strong quarter as Micron is forecasting.