Micron Technology (NASDAQ:MU) peaked in 2018 at above $60 and has since fallen. Heightening trade wars between the U.S. and China hurt the prospects for chip stocks. Analysts from Evercore and Baird downgraded Micron last week, albeit too late with issuing their warning to investors.
Baird set a $27 price target on Micron and now expects the downturn could continue into 2020. Previously, Baird and investors thought Micron would start a 2H/2019 recovery. But ongoing trade disputes are creating chaos and delays in customer orders. Smartphone sales peaked long ago, hurting demand for memory and NAND storage and accelerating the profit declines for Micron.
Contrarian Trading With Micron Stock
Earlier this month of June, Macquarie set a $50 price target but lowered Micron’s earnings and revenue estimates for the next two quarters. If investors bet that analysts are consistently behind the ball and are simply wrong about Micron’s rebound, the stock is a buy now. Management has a good track record and the memory and NAND storage demand will eventually recover. Smartphone suppliers continue to innovate, putting more chip per unit. If phone demand stabilizes or grows even slightly, Micron’s profit margins will increase. Only then will the stock re-visit the $60 yearly high.
