Shares of semiconductor company Micron Technology (MU) have fallen close to 48.0% in the last 12 months. Since the start of May 2019, Micron stock has lost over 22.0% due to the escalation of the trade war between the United States and China (FXI). Micron generates over 57.0% of its sales from China, so it makes sense that its stock has taken a massive hit.
Several US semiconductor stocks lost significant value in the fourth quarter of 2018 after President Donald Trump imposed a third round of trade tariffs on China. These stocks recovered in the first four months of 2019 as trade war fears eased, and growth was expected to resume in the second half of the year. However, the latest tariff announcement has created uncertainty. Micron stock is currently trading 48.0% below its 52-week high of $62.55.
Morgan Stanley (MS) downgraded Micron stock back in April this year over margin concerns and inventory pressure. The semiconductor industry is cyclical. Micron’s sales rose 57.0% annually between 2016 and 2018. Its sales are now estimated to fall 22.2% in 2019.
Micron has a forward PE multiple of 7.0x. While its earnings are expected by analysts to fall by a massive 46.0% this year, they’re expected to fall 27.8% next year. Micron’s earnings growth is expected to fall at a compound annual growth rate of 24.3% over the next five years.
Comparatively, its earnings have risen by an impressive 40.3% in the last five years. Its sales are expected to be flat between 2019 and 2021. It needs to return to revenue and earnings growth to keep investors interested.
Of the 31 analysts tracking Micron, 28 have given it “buys,” three have given it “holds,” and none have given it “sells.” Analysts have a 12-month average target price of $46.63 on Micron stock, indicating a potential upside of 43.0% from its current price.