By Sam Boughedda
Investing.com - A Raymond James analyst downgraded Micron Technology (NASDAQ:MU) to Outperform from Strong Buy and trimmed the firm's price target on the stock to $65 from $72 per share after it cut its revenue forecast for the current quarter and warned of negative free cash flow in the next quarter due to macroeconomic factors, supply chain challenges and declining demand.
The news resulted in Micron's share price falling 3.7% Tuesday.
"While we continue to believe MU will benefit from significant secular trends driving long-term demand — while also enjoying technology and cost advantages over peers — we feel near-term news is likely to work against shares into FY23, limiting upside," said the analyst.
The analyst added that Micron's press release, mentioning macro conditions and supply constraints, has led to a steeper cut in bit shipments and margins than previously thought.
"This is consistent with recent reports (and NVDA's preannouncement) citing weakening consumer macro and supply shortages in datacenter and auto/industrial driving order pushouts. With shares trading off just ~5% on the news, and ~15% above the 52-week low, we believe investors may view this as something of a clearing event, providing downside support, with significant room for upside as supply rebalances in FY23," concluded the Raymond James analyst.