Dallas, Texas 06/10/2015 (Financialstrend) – Micron Technology, Inc. (NASDAQ:MU) could come under immense pressure as Samsung continues to bring DRAM prices down. The use of costs savings technology in the manufacture of the DRAM chips by the Korean juggernaut is already sending shockwaves in the industry.
Share Price Target Slashed
It is a concern that has forced Rick Whittington of Drexel Hamilton to initiate a sell rating on the stock. Whittington has slashed his price target for the stock from $40 to $20 on concerns that Micron Technology, Inc. (NASDAQ:MU) could face the full effects of a lower margin environment. It is the second time in a month that the research firm has downgraded the stock
DRAM prices have been on a downward trend and less profitable, much to the concern of the Street. Drexel expects the level of competition in the business to take a toll on Micron Technology, Inc. (NASDAQ:MU) earnings this fiscal year. As a result, the research firm has slashed its full-year earnings estimates from $2.87 and $2 to lows of $0.30 and $1.32
A decline in PC sales is also having a toll on earnings on the sale of DRAM chips as companies reduce their spending. The weaknesses in prices also seem to have found its way into the mobile space as Samsung continues to bring production costs down.
Micron Technology’s Concerns
Whittington is also raising concern over the ability of Micron Technology, Inc. (NASDAQ:MU) to compete against big spenders like Samsung that continue to employ advanced technology in the production processes. The fact that the company continues to lag behind in terms of advanced technology could take a toll on production and earnings going forward.
The analyst expects Micron Technology, Inc. (NASDAQ:MU) to register a further decline in sequential EPS heading into the fourth quarter. The company’ Taiwan venture should also come under pressure as pricing pressure continues to be rife in the industry.