Micron stock is ‘well-positioned’ to weather the PC/Smartphone slowdown

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Investors are keeping away from chip stocks this year on fears of a slowdown in PCs and Smartphones. Still, a Jefferies analyst says Micron Technology Inc (NASDAQ: MU) continues to be a smart pick here.

Micron Technology has managed expectations

Interestingly, Jared Weisfeld remains constructive on Micron even after the company itself said its current fiscal quarter was likely to disappoint. Explaining why on CNBC’s “Squawk Box”, he said:

Micron is a stock that’s approaching book value. You need to be selective in semiconductors and focus on names that’ll have significant estimate revisions which investors can have comfort that those numbers are de-risked going forward.

Smartphones are expected to see about a 5.0% decline this year while the PC market is estimated to take a broader 10% hit. Micron currently trades at a PE multiple of 6.48.

Weisfeld’s outlook on semiconductors at large

For the semiconductor space at large, Weisfeld agrees the balance of 2022 will continue to be bumpy, but he’s confident the next year would be a different story. The analyst noted:

Micron cut their outlook for semiconductor CAPEX heading into fiscal 23. That’ll help the supply-demand situation. I think we’ll see a lot more of that. It could be setting up very well heading into 23 as supply-demand comes in balance.

A 40% year-to-date decline in iShares Semiconductor ETF is also related to the broader risk-off in technology on rapidly rising rates. The U.S. Fed announced its biggest rate hike since 1994 last month.   

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