Why Micron Stock Dropped Again Tuesday

For the 2nd time successful a row, Micron (NASDAQ: MU) banal fell connected Tuesday, down 3% done 11:45 a.m. ET. And for the 2nd time successful a row, Micron banal fell connected Tuesday... contempt being recommended arsenic a "buy" connected Wall Street.

Yesterday, if you recall, analysts astatine TD Cowen acceptable a $600 terms people connected Micron stock, predicting a 55% nett arsenic the institution rode a rising tide of DRAM riches to gain arsenic overmuch arsenic $60 a share. Today, it's Deutsche Bank's crook to urge Micron -- and person its proposal rejected by investors.

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"Unprecedented" choky supplies of DRAM representation chips combined with precocious request for DRAM and HBM (high bandwidth memory), says Deutsche Bank expert Melissa Weathers, are "favorable for MU," and connote some higher prices for the company's chips -- and fatter profits for Micron.

Weathers is somewhat little optimistic than TD Cowen's expert was yesterday. However, she's inactive forecasting Micron to gain $46.50 this year, and she values the banal likewise to Cowen, arguing that a valuation of 11 times net is due for the semiconductor stock: $500 a share.

And yet, astatine the aforesaid clip arsenic Weathers recommends buying Micron and raises her terms people connected the stock, she besides gives the aforesaid informing that Barron's highlighted yesterday:

There's a hazard that "additional proviso being brought connected by competitors" could origin "a deterioration successful representation pricing" -- derailing Micron's hopes for higher prices, sales, and profits. With Samsung reportedly ramping up HBM production, this is simply a hazard investors request to carnivore successful mind. Just due to the fact that Micron's doing good contiguous doesn't mean the semiconductor manufacture has go immoderate little cyclical!

And adjacent astatine conscionable 12x earnings, Micron banal is not without risk.

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