Micron Technology (MU.US) stock dropped more than 4% on Friday after Morgan Stanley lowered memory chip provider rating to underweight from equal-weight and kept the $56 price target as the latest quarterly guidance did not “clear the decks”. The downgrade came after Micron released quarterly results in June that fell short of market projections and provided guidance for the coming quarter, which was also disappointing.
- "While Micron likely guided conservatively relative to their outlook at the time, the market continues to deteriorate, both volume (the primary reason for the weaker guidance)”, wrote analyst Joseph Moore.
- Additionally, competitors have recently lowered their prices even by 20% or more in exchange for volume commitments, which puts additional pressure on Micron.
- Moore pointed out that stock is “very inexpensive” on trailing P/E with book value offering protection against the downside. On the other hand, shares look “expensive on trough cash flow, peak cash flow, and through cycle cash flow, relative to peers.”
Micron Technology (MU.US) stock launched an upward correction recently, however buyers struggle to break above key resistance at $65.05, which is marked with previous price reactions, 50.0% Fibonacci retracement of the upward wave launched in March 2020 and upper limit of the wedge formation. As long as price sits below this level, the main trend remains bearish. Nearest support to watch lies at $57.30. Source: xStation5
