Micron Technology, Inc. (NASDAQ: MU) is having a relatively rough start to the trading session this morning, and for good reason. The company that just so happens to be the best performing publicly traded chip maker of the year thus far was at the center of an analyst downgrade. Of course, the downgrade led to fear among investors, sending the stock spiraling down. Today, we’ll talk about:
- The analyst downgrade;
- what we’re seeing from the stock as a result; and
- what we’ll be watching for with regard to MU ahead.
MU Is Downgraded At Morgan Stanley
As mentioned above, Micron Technology is having a rough start to the trading session this morning after the company was at the center of a downgrade. In a recent report, Morgan Stanley Analyst Joseph Moore downgraded the stock from overweight to equal-weight. Ultimately, Moore sees the valuation as fully priced. In the note, the analyst reiterated the price target of $65 on MU, which represents an upside of 4% compared to the closing price on Wednesday. Also, the analyst has lost some confidence in the chip maker after talking to corporate sources. Here’s what Moore had to offer In a statement with regard to MU:
After being bullish on memory for the last two years, we are moving to a neutral stance. DRAM remains strong but looks priced in as MU is very close to our PT… We would rather err on the side of caution in an environment where we can see storm clouds on the horizon.
While data points haven’t meaningfully changed, there is less conviction about a seasonal rebound from our industry contacts than we heard just a few weeks ago… Our conversations with cloud buyers indicate more of a mixed picture than we have heard in recent quarters, with everyone getting what they need and some mild pushouts in timing.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to dig into the market is that the news causes moves. In the case of Micron Technology, the news proved to be overwhelmingly negative. After all, Morgan Stanley is one of the most well-trusted analyst firms on Wall Street today. So, when they show concern surrounding a stock with a downgrade, we tend to see a reaction in the market. With that said, it’s no surprise that fearful investors are sending the stock tumbling in the market today. As is normally the case, our partners at Trade Ideas were the first to alert us to the declines. At the moment (8:06), MU is trading at $60.78 per share after a loss of $1.79 per share (2.86%) thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on MU. In particular, we’re interested in following the story surrounding the company’s growth and excited to see if the company is capable of proving Morgan Stanley wrong. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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