Micron downgraded at Morgan Stanley on fears of 'material volume weakness in all markets'
Micron Technology (NASDAQ:MU) fell nearly 5% on Friday after investment firm Morgan Stanley downgraded the semiconductor company, citing worries over "material volume weakness in all markets."
A group of analysts, led by Joseph Moore, lowered Micron Technology (MU) to underweight from equal weight, but kept the $56 price target, noting that all markets, including hyperscalers, are becoming an issue.
"Our sense is that this is less about demand and more about inventory, as customers in all markets listened to the substance of Micron's commentary - that shipments this quarter and next will be well below production, with a large Micron inventory build by year end - and start to release inventory buffer," the analysts wrote in a note to clients.
The analysts also noted that Micron's (MU) competition are also getting aggressive on product, with prices down 20% or more sequentially for hyperscale DRAM, between $100 and $105 for 32GB of RDIMMS. The price cuts are only happening if customers take "material volume" but otherwise, prices are still just below $120.
In addition, the analysts added that they spoke to "multiple customers" and they said they are being more aggressive with inventory in light of Micron's commentary and some PC and server DRAM purchases are down 30% in the third-quarter compared to the second-quarter.
Micron Technology (MU) recently offered weak guidance for its upcoming quarter, citing weakness in all of its businesses except for server DRAM memory chips.
Earlier this month, Micron Technology (MU) said it was dealing with a "prolonged power disruption" at its Hiroshima DRAM manufacturing facility that would result in a productivity loss and wafer scraps and impact its fourth-quarter and the first-quarter of fiscal 2023.
Analysts have been mixed on Micron (MU). It had an average rating of HOLD from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, rates MU a HOLD.