Micron stock falls ahead of its earnings

Micron Technology’s (MU) fiscal 2019 second-quarter earnings will likely feel the heat of the demand weakness in China (FXI), which has seen many of its chip customers report weaker-than-expected revenue falls.

Many analysts are downgrading the stock ahead of its earnings after a DRAMeXchange report on March 5 stated that first-quarter PC DRAM (dynamic random-access memory) contract prices had fallen ~30%, the sharpest decline in eight years. The report shows that the memory market decline has been worse than expected.

Why Micron Stock Fell ahead of Its Q2 2019 Earnings Results

Looking at DRAM prices, analysts expect Micron to report weaker-than-expected earnings in the second quarter of fiscal 2019. Analysts have also lowered Micron’s 2019 earnings and revenue estimates, as they don’t expect demand to rebound in the second half of 2019. Bullish analysts have become neutral, and downgrades pulled Micron stock down 4% from March 1 to 12.

Micron’s technicals at a glance

The stocks of Micron and Western Digital (WDC) are currently trading above their 50-day moving averages but below their 200-day moving averages. A stock’s moving average takes into account the average of its prices over a certain period of time to understand the direction in which its movement is skewed. Micron’s two-month rally in 2019 didn’t offset its six-month decline. The stock is set to fall through 2019, as a memory market upturn is not expected in the near future.

Micron is a good buy at dips. Its historical data show that it has rebounded significantly since bottoming out. However, Micron is not recommended as a “buy” right now, as the stock is set to fall further before rebounding. If the stock falls below its 52-week low of $28.39, it could be an ideal time to buy.

Next, we’ll see what market dynamics could pull Micron stock down.

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