Arya downgraded the stock to a $62 per share price target, which was $8 less than his previous target. Analysts from lowdown cited lower consumer demand and China's COVID 19 controls in the upcoming quarter.
The senior semiconductor analyst Vivek Arya, a senior semiconductor analyst at Bank of America BAC, shared his thoughts on Micron's earnings and the semiconductor industry.
Arya told Yahoo Finance Live that the slowdown is catching up in a number of areas. We prefer to move to the sidelines because it could take a few quarters for growth to reemerge, because it is not just on the sales side. Arya downgraded the stock to a $62 per share price target, which was $8 less than his previous target. Analysts from Barclays, BMO Capital Markets and Piper Sandler also lowered their expectations for Micron.
Micron is not the only semiconductor company that is feeling the pinch. Nearly all the major chip stocks have had a rough 2022 - the PHLX Semiconductor SOX index is down 37% year-to-date YTD Arya expects this slowdown to last for a while.
He explained that we have to separate the semiconductor sales and action they are taking from the stocks themselves. It is very possible that these stocks fall in six to nine months before we can see the bottoming of their fundamental trends. Arya believes that investors can revisit chip stocks later in the year.
What we suggested in our last report is that this correction could play out all the way to the end of Q 3. That's when supply chains start to normalize and we can see what demand will be, Arya said.
Arya wonders what holiday demand for tech products, like iPhones, is as high as the U.S. Bureau of Economic Analysis reported a 6.3 percent increase in the PCE price index for May.
Arya thinks September or October would be the best time to see if consumer demand has changed and if the semiconductor industry has a brighter future.
He has a keen eye on the three Cs of semiconductors: cloud, cars, and capital expenditures.
Arya said that as we get out of this downturn, you have to look at the places where fundamental spending and trends are going to be more resilient over time.