Out of the 34 analysts covering Micron (MU), 19 analysts have rated the stock a “buy,” while 14 analysts rated the stock a “hold.” Only one analyst has given the stock a “sell” rating despite the decline in memory chip demand and prices, which has affected a number of chipmakers. Analysts have set a target price of $46.64 for the stock and a median consensus estimate of $44.50. Micron is now trading at a ~15% discount to its consensus median target estimate.
Outlook on Micron
Micron, the maker of storage and memory chip technologies, is dealing with an oversupply of DRAM as well as NAND (negative AND) memory chips due to softness in global demand for mobile and other electronic devices. South Korean smartphone maker Samsung (SSNLF) is also struggling from a slowdown in demand and a drop in chip prices. Rivals NVIDIA (NVDA) and Intel (INTC) are also getting affected by the inventory pile-up due to a slowdown in chip demand.
Also, the weakness in Apple’s iPhones might hurt Micron as well as rival chip stock Western Digital (WDC), which have exposure to Apple’s iPhone business. Micron, which gets about 50% of its revenue from China (MCHI) (FXI), is also expected to see a negative impact from trade war worries.
Susquehanna analyst Hosseini has doubts about a recovery in demand for memory chips soon due to an excessive inventory pile-up. Japan’s automaker Renesas also expects chip demand, especially for autos, machine tools, and air conditioners, to decline further in 2019.
The company is focusing on improving its operating leverage to mitigate the impact of declining chip prices. Micron has significantly reduced its long-term debt from $3.777 billion by the end of August to $3.734 billion at the end of November.