Mizuho Downgrades Lam Research, Western Digital, Remains Positive On Micron

After a trip to Asia, Mizuho is dropping its bullish stance on Lam Research Corporation LRCX and Western Digital Corp WDC, but remains positive on Micron Technology, Inc. MU, a company the sell-side firm describes as a "better house in a tough neighborhood."

The Analyst

Mizuho Securities' Vijay Rakesh downgraded Lam Research from Buy to Neutral with a $165 price target.

The analyst downgraded Western Digital from Buy to Neutral with a $65 price target.

Rakesh maintained a Buy on Micron with a price target lowered to $60.

The Thesis

Rakesh cited the following factors in Monday's ratings changes. (See his track record here.)

• NAND average selling prices should continue falling at a low-double-digit rate through the first quarter of 2019.
• NAND ASP should continue falling post-Q1 of 2019 at a high-single digit rate.
• Consensus estimates calling for Western Digital to report flat gross margins are optimistic given the risk of significant downside.
• Lam Research faces multiple troubles ahead, including NAND bit growth cuts, Samsung NAND pushouts and delays at China's YMTC and Wuxi DRAM fab pushouts.
• Micron boasts more favorable DRAM discipline and a faster stabilization outlook and is supported by a $10-billion stock buyback program.

Price Action

Lam Research shares were down 0.94 percent at the time of publication Monday, while Western Digital shares were down 0.63 percent and Micron shares were up 0.27 percent. 

Related Links:

NAND Headwinds Are Behind RBC's 'No-Drama Downgrade' Of Western Digital

Goldman Sachs Downgrades Micron: 3 Reasons Why