Shares of Micron Technology (MU -1.46%) have declined by 13% so far this week as of noon EDT on Friday as investors continue to fret about the global semiconductor shortage that has disrupted a broad swath of industries in 2021. Adding to the pessimistic investor sentiment, Wall Street analysts are also souring on Micron stock.
On Tuesday, Susquehanna released a report detailing extended timelines for semiconductor companies to fill orders, with the average order-filling time now reaching 20.2 weeks. That's the highest level in four years. The industry is still reeling from the pandemic.
On Thursday, Morgan Stanley downgraded its rating on Micron from overweight (equivalent to buy) to equal weight (equivalent to neutral) while warning that the broader memory sector is exposed to higher risk right now. The memory industry is highly cyclical, and analyst Joseph Moore believes that the cycle is shifting from "mid-cycle" to "late-cycle" for the first time since 2019. That transition has historically led to challenging market conditions.
"We were prepared to become more constructive under the right conditions, but ultimately it is about inflections in the cycle and trajectory of earnings estimate revision breadth -- the former approaching an earlier peak YoY pricing and latter approaching negative earnings risk that follows," Moore wrote in a research note to investors. The analyst cut his price target from $105 to $75.
Earlier this morning, Evercore ISI also removed Micron from its Top Pick List as analyst C.J. Muse reduced his price target from $135 to $100. Evercore is still bullish overall, reiterating an outperform rating.