Micron Falls After Morgan Stanley Cuts Rating to Underweight

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Micron Technology Inc. the biggest U.S. maker of memory chips, fell the most in more than two months after Morgan Stanley cut its rating, citing excessive customer inventories.

Micron dropped 3.5 percent to $24.24 at the close in New York trading, the most since March 25. The shares have declined 31 percent this year.

Morgan Stanley analyst Joseph Moore lowered his rating on Micron shares Monday to underweight from equal weight and cut his 12-month price target to $21 from $30. While he said he had expected a rebound in earnings levels in the third quarter, Moore now said that will be delayed until at least the fourth quarter because of the inventory issue.

Micron, based in Boise, Idaho, has been hurt by declining demand for computers, a market that accounts for about 30 percent of its sales, according to an estimate from Nomura Securities International. And while an increasing portion of Micron’s sales are coming from smartphone makers, Moore said recent demand “has been short of high expectations.”

Revenue in the period that ended in May will be as much as $4.05 billion, Micron said in April. Analysts on average had predicted sales of $4.27 billion, according to data compiled by Bloomberg.

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