By Investing.com — Micron Technology (NASDAQ:MU) saw its shares fall over 4% Thursday after a double downgrade from Exane BNP Paribas (OTC:BNPQY).
The firm lowered its rating on Micron from Outperform to Underperform, citing concerns over excess High Bandwidth (NASDAQ:BAND) Memory (HBM) capacity and the impact on conventional DRAM pricing.
The price target was slashed from $140 to $67, reflecting a sharp shift in the outlook for the company’s near-term performance.
Exane BNP Paribas highlighted potential downside risks, stating, “While some investors correctly anticipate downside risk to near-term results, we think Micron will underperform AI peers through 2025.”
The bank noted a faster-than-expected market correction in DRAM prices due to oversupply in HBM, which could lead to a downturn in the broader DRAM market.
Exane estimates that by the end of 2025, HBM capacity will significantly outpace demand, which could drive down pricing.
“HBM installed capacity of ~315k wafer starts per month (wspm) by end CY24 and ~400k wspm by CY25 will exceed demand of ~168k wspm in CY25,” the bank added.
The downgrade is also rooted in concerns about the broader memory cycle.
Exane BNP Paribas concluded that the current upcycle for DRAM prices would likely peak in the November quarter. Despite Micron’s stock already dropping about 41% from its peak, Exane remains cautious, saying, “There is still downside risk even to our target price of $67/sh.”
Exane’s bearish stance on Micron contrasts with the broader analyst consensus, with the bank noting it remains predominantly bullish with 39 buys and only 2 holds.
However, they believe further rating downgrades and earnings cuts will weigh on the stock in the near term.
