Morgan Stanley Sees Choppier Waters Ahead For Micron, Says To 'Use Strength As A Selling Opportunity'

Micron Technology, Inc. MU lowered its fiscal first-quarter revenue guidance Wednesday to the low-end of the previous range of $7.9 billion to $8.3 billion, while it sees EPS above the midpoint of its previous guidance of $2.95, plus or minus 7 cents.

The Analyst

Morgan Stanley analyst Joseph Moore maintained an Equal-weight rating on Micron with a $48 price target.

The Thesis

The margin upside is an indicator of Micron's strong execution, Moore said in a Wednesday note. (See his track record here.)

The chipmaker referenced strong end market demand, but expects inventory clearance to take a couple of quarters, the analyst said. 

Moore said he is more negative than the company's longer-term forecasts on end market demand as well as supply.

DRAM wafer equipment shipments are up 60 percent year-to-date, and capex is expected to remain strong through early 2019, he said. 

Morgan Stanley expects DRAM conditions to remain difficult throughout 2019.

"We remain EW and would use strength as a selling opportunity," Moore said. 

The Price Action

Micron shares, which have lost about 6 percent in the year-to-date period, were last seen down 1.05 percent to $38.30 Thursday.

Related Links:

Micron Analysts Parse The Q4 Print; Macquarie Says 'We Expect The Downturn To Be Short-Lived'

RBC Stays Bullish On Micron, Lowers Estimates To Reflect Tougher Memory Forecast