A recovery this year is “unlikely” for Micron Technology, given weak consumer demand for smartphones and PCs, according to Bank of America. The memory chip maker saw its shares fall after hours Thursday after issuing a warning on low chip demand. Analyst Vivek Arya downgraded shares of Micron to neutral from buy, saying in a Friday note that the company’s recent earnings report pointed to growing challenges for chip stocks around weak consumer demand, as well as Covid lockdowns in China. Already, shares of Micron are down 40% year to date. “Valuation is low, and a large reset provides a near-term stock rebound potential, but fundamental growth recovery could be well into CY23 in our view,” Arya wrote. Bank of America trimmed the price target to $62 from $70. The new price target is still about 12% above where shares closed Thursday. Micron CEO Sanjay Mehrotra on Thursday said sales of smartphones and PCs will decline meaningfully this year . Smartphone unit volumes may drop by about 5% compared to the same period last year; PCs are expected to tumble 10%. “We rate Micron as a Neutral on a balanced risk reward. The company benefits from several secular trends in the data center, cloud computing and 5G markets. However near term it faces cyclical headwinds in the consumer market and has elevated inventories that can limit stock upside,” the note read. Shares of Micron dropped 5% in Friday premarket trading. —CNBC’s Michael Bloom contributed to this report.
Source: cnbc.com
