Raymond James downgrades Micron after weak forecast, citing limited near-term upside
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Investment firm Raymond James added on to Micron Technology's (NASDAQ:MU) woes, downgrading the semiconductor company after it issued a weak forecast for the fourth-quarter, citing the fact that "near-term news is likely to work against shares" going into the next fiscal year.
Analyst Chris Caso lowered his rating on Micron (MU) to outperform from strong buy and trimmed the price target to $65, noting that while the long-term picture is still intact due to several secular trends, the near-term could be rocky.
"This morning's press release called out macro conditions and supply constraints leading to a 'broadening of customer inventory adjustments,' leading to a steeper cut in bit shipments and margins than previously thought," Caso wrote in a note to clients. The analyst added the news is "consistent" with recent reports and Nvidia's (NASDAQ:NVDA) preannouncement on Monday.
However, given the fact that shares are off roughly 5% on the news and 15% above its 52-week low, investors may be taking the news in stride. 
"...We believe investors may view this as something of a clearing event, providing downside support, with significant room for upside as supply rebalances in [fiscal 2023]," Caso explained.
Micron (MU) said its fourth-quarter revenue would be at or below the low-end of its previous guidance of $6.8B to $7.6B that the company gave on June 30.
In addition, Micron (MU) said its bit shipments during the first-quarter would decline sequentially and there would be "significant" sequential declines in revenues and margins. Micron (MU) also added that it would be free cash flow negative in the first-quarter.
Micron (MU) also added that its total capital expenditures in 2023 would be down significantly when compared to 2022.
Separately on Tuesday, Micron Technology (MU) said it would invest $40B through the end of the decade in the U.S. to build leading-edge memory manufacturing in multiple phases.
Analysts are mostly positive on Micron (MU). It had an average rating of BUY 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.