Micron Technology, Inc. (MU) shares fell more than 5% in early trading on Wednesday following its first quarter financial results released on Tuesday night. Revenue rose 16.3% to $7.91 billion, missing consensus estimates by $90 million, while GAAP earnings per share of $2.81 missed consensus estimates by eight cents per share. Second quarter guidance also came in below analyst projections thanks to weaker-than-expected NAND and DRAM demand.

Analysts came out bearish on the stock following the lackluster financial results. Needham downgraded the stock from Strong Buy to Hold, saying that demand could worsen and pressure margins. RBC similarly downgraded the stock to Sector Perform from Outperform and lowered its price target to $40 per share, saying that inventory and demand risks could lead to revenue, gross margin and EPS reductions over the next two to three quarters.

Technical chart showing the performance of Micron Technology, Inc. (MU) stock
StockCharts.com

From a technical standpoint, the stock broke down from key trendline support to fresh 52-week lows. The relative strength index (RSI) is nearing oversold conditions with a reading of 35.42, but the moving average convergence divergence (MACD) remains in a bearish downtrend. These indicators suggest that traders could see a bit more downside before some consolidation.

Traders should watch for some consolidation near S2 support at $30.63 with upper trendline resistance at around $34.00. If the stock breaks down from S2 support, traders could see a move lower to long-term trendline support at around $30.00. If the stock rebounds back above the $34.00 level, traders could see a move higher to retest pivot point and 50-day moving average resistance at around $38.00.

The author holds no position in the stock(s) mentioned except through passively managed index funds.