Micron Technology, Inc. (MU) shares fell more than 3% during Monday's session after Goldman Sachs downgraded the stock to Neutral with a price target of $49 per share. Analyst Toshiya Hari has a positive long-term outlook for the industry but cautioned that Micron stock's risk/reward is already balanced at current levels, leaving little room for upside.

Last month, the company beat second quarter revenue and earnings estimates. Revenue fell about 18% to $4.8 billion, beating consensus estimates by $110 million, and GAAP earnings per share came in at 36 cents, beating consensus estimates by eight cents. However, the company pulled its fiscal year demand outlook amid intermediate-term uncertainty.

Following those results, Piper Sandler lowered its price target from $56 to $48, citing demand uncertainties from the COVID-19 outbreak. Keybanc reiterated its Overweight rating and $48 price target, citing the fact that Micron pulled its full-year demand outlook.

Goldman Sachs' Toshiya Hari also started coverage of Western Digital Corporation (WDC) at Neutral, citing demand weakness that could cap NAND pricing, and Seagate Technology plc (STX) at Sell with a $41 price target, citing multiple secular challenges.

Chart showing the share price performance of Micron Technology, Inc. (MU)
TrendSpider 

From a technical standpoint, Micron stock experienced a bearish engulfing at the end of last week and moved toward trendline support during Monday's session. The relative strength index (RSI) remains neutral with a reading of 50.54, but the moving average convergence divergence (MACD) continues to trend higher. These indicators suggest a modestly bullish outlook.

Traders should watch for a rebound from trendline support toward the upper end of its price channel near the 50- and 200-day moving averages at around $50 per share. If the stock breaks down, traders could see a move to reaction lows of $40 or $35 over the intermediate term, although the bullish momentum makes these moves less likely to occur.

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