- Deutsche Bank predicts longer chip downturn
- Q1 revenues seen falling from $7.68 billion to $4.22 billion
- Analyst trims price target from $60 to $55
Memory microchip designer Micron Technology (MU:NASDAQ) has been downgraded by analysts at Deutsche Bank just days before the $60 billion company is due to report first-quarter earnings.
‘We are incrementally more cautious on the memory market, as we believe the current downturn will last longer and be more severe than we previously forecast,’ said Deutsche Bank analyst Sidney Ho in a note to clients, in which he cut his price target on the stock from $60 to $55.
‘On the demand side, weakness in consumer PC/smartphone has now spread to the enterprise side, and even cloud demand is starting to weaken,’ the analyst wrote. While Ho applauded Micron for trying to limit its supply growth, he said that ‘Samsung's unwillingness to cut back on capex and production will likely prolong the downturn.’
SHARP REVENUE/EARNINGS FALLS PREDICTED
Shares in the Boise, Idaho-based chip maker have fallen sharply this year as rising interest rates and the threat of a recession have dogged global stock markets, losing 42% year-to-date. The shares have lost 11% during the past month as investors worry about the scope for a recovery in 2023.
Micron is expected to post a significant year-on-year drop in revenues and earnings when it reports first quarter results for fiscal 2023 on 21 December 2022. Consensus forecasts are for $0.253 of earnings per share on $4.22 billion in revenue, down from $2.10 per share and $7.68 billion of revenue a year ago, according to Investing.com data.
Micron stock is seen opening at $55.38 when Wall Street resumes trading later today.
