We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Shares of Micron Technology (MU - Free Report) slumped nearly 5.5% in morning trading Thursday after UBS initiated coverage of the trendy stock with a sell rating. The analyst team, led by Timothy Arcuri, are apparently bearish on Micron due to “cyclical memory concerns and big estimate cuts.”
Arcuri argued that Micron’s supply chain has struggled to keep inventory growth on pace with revenue expansion over the four quarters, a phenomenon which has helped create a “very favorable cyclical backdrop” for the semiconductor business. However, the analyst feels this factor is rapidly waning and will soon become a headwind.
UBS also assigned a sell rating to chip behemoth Texas Instruments (TXN - Free Report) . Meanwhile, the firm initiated coverage of three semiconductor plays—Broadcom (AVGO - Free Report) , Marvel Technology (MRVL - Free Report) , and KLA-Tencor (KLAC - Free Report) —with buy ratings.
Arcuri’s concern that cyclical trends could eventually become headwinds is one that frequently looms above the semiconductor industry. Decades of progress in personal, business, and mobile computing have allowed analysts and investors to pick up on recurring factors that both drive growth and cause pullbacks.
However, those that are bullish on Micron believe that new secular trends are enough to outweigh these cyclical factors, and company management is working to shift the rhetoric by painting a new picture of its business.
“The dealer market today is very different from the PC-dominated market of the past,” said Micron CEO Sanjay Mehrotra in the company’s latest earnings report. “More specifically, memory is making possible applications such as AI and VR, and enabling new cloud-based business models which deliver a fundamental value far in excess of a price per bit.”
Memory remains a heavily-commoditized segment of the technology sector, thanks in large part to cyclical trends like those mentioned by Arcuri. But for those that believe in the power of these new secular trends, this means that Micron is trading at extremely attractive valuation levels.
For instance, MU is currently sporting a Forward P/E of just 5.2, which comes in at a significant discount to the average of 18.8 displayed by our broader “Computer and Technology” sector. Micron is also sporting an “A” grade for Value in our Style Scores system.
It is also worth noting that, despite Arcuri’s bearish sentiment, analysts have been largely optimistic about Micron over the past month. In fact, the company has witnessed nine positive revisions to its full-year EPS estimates within the last 30 days, lifting its Zacks Consensus Estimate by $0.48. This positive revision activity has earned the stock a Zacks Rank #1 (Strong Buy).
Want more market analysis from this author? Make sure to follow @Ryan_McQueeneyon Twitter!
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
Image: Bigstock
Why Is Micron (MU) Stock Slipping Today?
Shares of Micron Technology (MU - Free Report) slumped nearly 5.5% in morning trading Thursday after UBS initiated coverage of the trendy stock with a sell rating. The analyst team, led by Timothy Arcuri, are apparently bearish on Micron due to “cyclical memory concerns and big estimate cuts.”
Arcuri argued that Micron’s supply chain has struggled to keep inventory growth on pace with revenue expansion over the four quarters, a phenomenon which has helped create a “very favorable cyclical backdrop” for the semiconductor business. However, the analyst feels this factor is rapidly waning and will soon become a headwind.
UBS also assigned a sell rating to chip behemoth Texas Instruments (TXN - Free Report) . Meanwhile, the firm initiated coverage of three semiconductor plays—Broadcom (AVGO - Free Report) , Marvel Technology (MRVL - Free Report) , and KLA-Tencor (KLAC - Free Report) —with buy ratings.
Arcuri’s concern that cyclical trends could eventually become headwinds is one that frequently looms above the semiconductor industry. Decades of progress in personal, business, and mobile computing have allowed analysts and investors to pick up on recurring factors that both drive growth and cause pullbacks.
However, those that are bullish on Micron believe that new secular trends are enough to outweigh these cyclical factors, and company management is working to shift the rhetoric by painting a new picture of its business.
“The dealer market today is very different from the PC-dominated market of the past,” said Micron CEO Sanjay Mehrotra in the company’s latest earnings report. “More specifically, memory is making possible applications such as AI and VR, and enabling new cloud-based business models which deliver a fundamental value far in excess of a price per bit.”
Memory remains a heavily-commoditized segment of the technology sector, thanks in large part to cyclical trends like those mentioned by Arcuri. But for those that believe in the power of these new secular trends, this means that Micron is trading at extremely attractive valuation levels.
For instance, MU is currently sporting a Forward P/E of just 5.2, which comes in at a significant discount to the average of 18.8 displayed by our broader “Computer and Technology” sector. Micron is also sporting an “A” grade for Value in our Style Scores system.
It is also worth noting that, despite Arcuri’s bearish sentiment, analysts have been largely optimistic about Micron over the past month. In fact, the company has witnessed nine positive revisions to its full-year EPS estimates within the last 30 days, lifting its Zacks Consensus Estimate by $0.48. This positive revision activity has earned the stock a Zacks Rank #1 (Strong Buy).
Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>