Micron 'probably close to bottoming,' but timing of recovery unclear, Baird says
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Micron Technology (NASDAQ:MU) detailed spending cuts last week when it reported fourth-quarter results last week, and investment firm Baird told investors the stock is "probably close to bottoming." 
Analyst Tristan Gerra, who has a neutral rating and $45 price target on Micron (MU), noted the company's fundamentals have "vastly improved" over the past several years, but it is still in a cyclical business and it's unclear when the downturn is going to end. 
"Micron noted some slowdown in automotive demand, a trend not surprising as OEMs expect memory pricing to go down and are pushing orders accordingly," Gerra wrote in a Friday note to clients. "Importantly, this is a trend unlikely to be contagious to other semi components for as long as their supply is tight.
Last week, Micron (MU) said it would slash total capital expenditures 30% year-over-year and wafer fab equipment spending by up to 50% next year.
In addition, Gerra noted that demand for dynamic random access memory bit, or DRAM, in 2022 is expected to be in the low-to-mid single-digit range, with NAND up "slightly higher" at 10%. However, DRAM supply is expected to rise mid-single digits in 2023, though NAND supply may also fall behind demand. 
The analyst noted that Micron (MU) may start generating positive free cash flow in the second half of its fiscal year, though inventories are expected to exceed 150 days, compared to 90-days in the second half of 2021.
In conjunction with reporting fourth-quarter earnings, Micron (MU) said it would receive up to $322M from Japan to produce advanced memory chips at its Hiroshima factory.