By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
AmextaFinanceAmextaFinance
  • Home
  • News
  • Banking
  • Credit Cards
  • Loans
  • Mortgage
  • Investing
  • Markets
    • Stocks
    • Commodities
    • Crypto
    • Forex
  • Videos
  • More
    • Finance
    • Dept Management
    • Small Business
Notification Show More
Aa
AmextaFinanceAmextaFinance
Aa
  • Banking
  • Credit Cards
  • Loans
  • Dept Management
  • Mortgage
  • Markets
  • Investing
  • Small Business
  • Videos
  • Home
  • News
  • Banking
  • Credit Cards
  • Loans
  • Mortgage
  • Investing
  • Markets
    • Stocks
    • Commodities
    • Crypto
    • Forex
  • Videos
  • More
    • Finance
    • Dept Management
    • Small Business
Follow US
AmextaFinance > Investing > Micron’s stock falls after China ban. Here’s why gauging the impact isn’t so simple.
Investing

Micron’s stock falls after China ban. Here’s why gauging the impact isn’t so simple.

News Room
Last updated: 2023/05/22 at 5:09 PM
By News Room
Share
4 Min Read
SHARE

This story has been updated to specify revenue estimates for mainland China and correct the name of the conference Micron’s CFO is attending Monday.

Micron Technology Inc. shares were falling 4% in premarket trading Monday as Wall Street tried to determine the future impact of a failed China cybersecurity review on the chip company’s business.

While analysts said Micron
MU,
-2.85%
derived about 11% of its revenue last fiscal year from mainland China, they also noted that gauging the likely impact to Micron might be more nuanced than a look at overall China revenue would suggest. That’s because China ordered critical information infrastructure operators in the country to stop using the company’s products.

See more: China tells its tech manufacturers to stop using Micron chips

The definition of critical information infrastructure companies isn’t entire clear, “leaving investors to focus on the potential that consumer / handset / mobile device companies may not fall under this definition and therefore Micron’s sales into this end market may not be impacted,” Wells Fargo analyst Aaron Rakers wrote in a note to clients, while reiterating an overweight rating and $70 target price on the stock.

Micron disclosed in a filing with the Securities and Exchange Commission that it was “evaluating what portion of our sales could be impacted by a ‘critical information infrastructure’ ban,” while noting that its chief financial officer would share more at a JPMorgan conference later Monday.

Bernstein’s Mark Li doubted that Micron would end up feeling a sting to the tune of 11% of its total revenue.

He noted that “the ban is only on ‘domestic critical information infrastructure operators’ and other customers, especially those selling civilian products to other countries, are not legally required to do so.”

Further, Micron generated 20% of its revenue last fiscal year from “enterprise and cloud server” customers “and should we use this as the proxy of ‘critical information infrastructure operators’ the direct damage from the ban will be ~2% (11% x 20%),” Li wrote, while maintaining an outperform rating and $80 target on shares of Micron.

Monday movers: Micron shares slump after China threat, while Meta slips after record fine

Baird’s Tristan Gerra warned that the ban “reduces visibility on the timing of a gross margin recovery for Micron.”

“The ban could result in additional write-downs, given it will contribute to a further increase of internal inventories, along with some market share loss,” he wrote. “Given the current oversupply environment, Micron’s competitors have plenty of inventories to respond to the incremental demand from Chinese customers. The move could also lead Micron to take further pricing action in order to gain some market share at non-China customers as it suffers an inventory shock near-term while the competition improves theirs.”

Gerra had a neutral rating and $60 target price on Micron’s stock.

Read the full article here

News Room May 22, 2023 May 22, 2023
Share this Article
Facebook Twitter Copy Link Print
Leave a comment Leave a comment

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Finance Weekly Newsletter

Join now for the latest news, tips, and analysis about personal finance, credit cards, dept management, and many more from our experts.
Join Now
Bill Gates is giving away $200bn. Can his plans survive in the Trump era?

Twenty-five years ago, Bill Gates, then the world’s richest man, announced that…

Bulgarian spy helped Wirecard’s Marsalek plan Kabul airlift for CIA, court told

The leader of a Bulgarian spy ring helped Wirecard fugitive Jan Marsalek…

US and UK seal first deal of Trump’s trade war

The UK has clinched the first deal with the US since Donald…

Britain’s trade deal with Trump may not be good news for the world

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects…

New pope elected as white smoke appears over Vatican

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects…

- Advertisement -
Ad imageAd image

You Might Also Like

Investing

Why Home Builders Are Bouncing Today—and Why Their Stocks Are Good Buys

By News Room
Investing

This Beaten-Down Industrial Stock Wants to Call America Home. Why It’s Time to Buy.

By News Room
Investing

These 8 Dividend Aristocrats Can Protect Your Portfolio in a Downturn

By News Room
Investing

Some Lenders Benefit From SBA’s Troubled Loan Program

By News Room
Investing

Social Security Is in Turmoil. Should You Lock In Benefits Now?

By News Room
Investing

Hims & Hers Stock Is Due for a Crash Diet. The GLP-1 Surge Is Fading Fast.

By News Room
Investing

Opinion: The stock-market selloff isn’t over yet. Here are 4 reasons why.

By News Room
Investing

With Trump’s tariffs paused, ‘Big Three’ automakers may race to build inventories

By News Room
Facebook Twitter Pinterest Youtube Instagram
Company
  • Privacy Policy
  • Terms & Conditions
  • Press Release
  • Contact
  • Advertisement
More Info
  • Newsletter
  • Market Data
  • Credit Cards
  • Videos

Sign Up For Free

Subscribe to our newsletter and don't miss out on our programs, webinars and trainings.

I have read and agree to the terms & conditions
Join Community

2023 © Indepta.com. All Rights Reserved.

YOUR EMAIL HAS BEEN CONFIRMED.
THANK YOU!

Welcome Back!

Sign in to your account

Lost your password?