Micron (MU) has announced that its output levels out of China will be impacted following the shut down of the Chinese city of Xi’an. The closure is designed to curtail the further spread of COVID-19 in the city. MU shares fell 2.37% to close at $93.89 on December 30.
Micron is a U.S. Company that designs, manufactures, and distributes innovative memory and storage solutions. It produces computer memory and computer data storage solutions. Micron’s earnings report for Fiscal Q2 2022 is scheduled for March 30, 2022.
Xi’an Closure
The closure of the city has already resulted in a reduction of Micron’s workforce at the Xi’an site. Consequently, output levels of the DRAM assembly and test operations at the site will be impacted.
Bloomberg reports that the company has already opened discussions with local government officials to identify solutions to minimize the impact of the closure. It has also tapped its global supply chain and subcontractor partners to try and continue servicing customer needs.
The company has already started taking necessary measures to minimize the risk of the virus at its plant. It is currently conducting onsite testing, ensuring physical distancing, and reducing workforce density. However, Micron has also accepted that more stringent restrictions in Xi’an could have a significant impact.
Nonetheless, it is not the only company struggling with the new measures. South Korea’s Samsung has also seen its operations in the city affected.
Stock Rating
Last week Barclay’s analyst Thomas O’Malley reiterated a Buy rating on the stock and raised the price target to $100 from $87, implying 6.62% upside potential to current levels.
According to the analyst, “The downturn appears to be more transitory than sustained with improving supply allowing robust bit growth in the back half coupled with strong trends in Data Center, Mobile, and Auto/Industrial.”
Consensus among analysts is a Moderate Buy based on 18 Buys, 4 Holds, and 1 Sell. The average Micron price target of $107.73 implies 14.74% upside potential to current levels.
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