Latest PC, Chips And Memory Data Worries Analyst, Who Jumps Ship On Two Stocks

Mizuho analyst Vijay Rakesh downgraded Micron Technology, Inc MU to Neutral from Buy with a price target of $56, down from $75. Rakesh downgraded Western Digital Corp WDC to Neutral from Buy with a price target of $40, down from $62.

Recent checks show "steepening" DRAM and NAND memory price declines into the December quarter and first half of 2023. He acknowledged increasing NAND headwinds, with YMTC gaining share and adding significant capacity, potentially ramping into iPhone14 and a major supplier to Oppo, China handset OEMs.

Rakesh also accepted increasing DRAM headwinds, with weaker DDR5 adoption and slowing hyperscale ramps. The critical data center and server markets are starting to show weakness, with softening demand in China and Europe and slowing CPU/ GPU ramps. 

Rakesh sees slowing consumer and hyperscale demand and high inventory as headwinds for the companies despite their healthy execution with a robust and industry-leading Memory portfolio and improving 22TB HDD.

Rakesh said weak macro, consumer demand, high inventory, and continued supply growth imply more downside risk over the next 4-6 months. 

Wells Fargo analyst Aaron Rakers cut the price target on Micron to $75 from $90 and kept an Overweight. 

The set-up of Micron's upcoming Q4 results appears very harmful, as DRAM and NAND industry fundamentals continue to weaken. Like last quarter, Rakers reduced his forward estimates meaningfully/well-below Street expectations.

However, Rakers said the total revenue and EPS estimate cuts would matter less than Micron's commentary or investor sentiment about a fundamental bottoming, Micron's 2023 Capex guide, and inventory.

Price Action: MU shares traded higher by 1.32% at $51.47 on the last check Wednesday.

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