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JP Morgan slashes Micron price target due to Huawei ban



The headquarters building of Micron Technology Inc. stands in Boise, Idaho, United States

Matthew Staver | Bloomberg | Getty Images

Shares of Micron Technology fell Friday after J.P. Morgan lowered its outlook for the chipmaker due to the U.S. restrictions on Chinese telecom giant Huawei, a big customer of Micron.

J.P. Morgan cut its year-end price target for Micron to $ 50 from $ 64 on Friday but maintained its overweight rating. With Huawei accounting for 1

3% of Micron's sales in the first half of 2019, J.P. Morgan expects the chip to be the chipmaker for the rest of the year.

"Replacing bits sold to Huawei may take some time to normalize on substitution effects," Harlan Sur, J.P. Morgan's semiconductor analyst, said in a note Friday. "The shape of the recovery may be negatively impacted by trade demands with potential demand destruction in consumer segments." Shares of Micron fell 2.5% on Friday. The Trump administration blacklisted by Huawei was the last quarter in the escalated trade war.

and China, effectively captures American-made chips and forcing companies to cut with the Chinese giant

J.P. Morgan lowered 2019 earnings estimates for Micron to $ 5.64 per share from $ 6.19. The Wall Street consensus is $ 6.22 per share.

Micron is set to release its earnings for its fiscal third quarter on Tuesday.

"Though we meaningfully lower our forward estimates for Micron, we believe the risk reward profile is not favorable for Micron as the stock is trading near book value. Thus, barring a global recession or outright component export to China, we expect an improvement in August said, "Sur said.


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