Micron Technology (NASDAQ: MU) shares edged lower by 2% on Friday morning after JPMorgan Chase & Co. (NYSE: JPM) analysts slashed the Company’s price target, citing concerns over the Huawei ban.
J.P. Morgan cut its year-end price target for Micron from USD 64 to USD 50 per share, but maintained its overweight rating, according to CNBC.
The U.S. imposed a ban on Huawei where the Chinese tech giant would not be able to conduct business with U.S.-based companies. Huawei’s blacklist comes amid the ongoing trade war tensions between the U.S. and China. Major corporations such as Alphabet (NASDAQ: GOOGL) have already cut ties with Huawei.
Huawei accounted for 13% of Micron’s sales in the first half of 2019. And as a result of the ban, J.P. Morgan believes that the ban will weigh heavily onto Micron’s financials.
“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 tensions with potential demand destruction in consumer segments.”
J.P. Morgan also slashed its full-year forecast for Micron. Analysts are now expecting earnings of USD 5.64 compared to USD 6.19. However, the Wall Street consensus is USD 6.22 per share.
“Though we meaningfully lower our forward estimates for Micron, we believe the risk reward profile is net favorable for Micron as the stock is trading near book value. Thus, barring a global recession or outright component export ban to China, we expect an improvement in fundamentals following the August quarter trough,” Sur said.
Micron is set to report its third quarter financial results next Tuesday. Micron shares have gained 5% this year.