Trading Nation

The stock that's been chopped in half this year

Playing the plunge in Micron

Shares of Micron lost almost half of their value in the first half of 2015, making the semiconductor maker the worst-performing stock in the .

The most recent touch of bad news came last week, when the company's earnings and revenue showed year-over-year shrinkage and missed analysts' estimates, sending shares of the already-suffering stock down 16 percent overnight

The big issue is declining PC sales. Micron is heavily exposed to the that market, and weakness in computer sales has weighed heavily on the company.

"Revenue was sequentially lower, as expected, in fiscal Q3 due to near-term market headwinds driven primarily by weakness in the PC sector," CEO Mark Durcan said on the earnings call, though he later told an analyst, "I think it's fair to say that probably nobody expected the PC segment to be as slow as it's been."

Analysts have been falling all over themselves to reduce their estimates and price targets on the stock, in a series of increasingly desperate-sounding research notes. "Lower Guidance; Reducing Estimates, Target," Pacific Crest titled a June 26 note. "No Rush to Buy This One; This is Worse Than Expected," wrote Ladenburg Thalmann. "Not Structurally Broken, But Suffering Self-Inflicted Short-Term Pain," a more optimistic Wedbush went with. Stifel Nicolaus was most blunt: "Somebody Please Buy a PC!"

Still, price targets have not fallen nearly as quickly as the stock itself, making analysts look startlingly bullish. At the start of the year, when the stock was trading at $35, the average target price was $42; as of July 1, the average price target had fallen to about $30, while the stock is now trading below $19. This even as the number of sell ratings has risen from one to four. (The aggregate analyst data come from FactSet.)

The headquarters building of Micron Technology Inc. stands in Boise, Idaho.
Matthew Staver | Bloomberg | Getty Images

But some, like David Seaburg of Cowen, say the drop presents an "opportunity."

"We think they have some margin upside, and we think they have the ability to really transform this to be a real opportunity here," Seaburg, head of equity sales trading at Cowen, said in a Wednesday "Trading Nation" interview. "So at these levels start accumulating the stock. Look for August to be the washout in Micron."

Andrew Keene, an options trader with Keene on the Market, says that "there is a point when it's going to be a buy," but adds that "I don't want to dip in just yet. Wait for maybe a consolidation over three days, or one big volume day, where it reverses and close on the highs, which will signal the bottom."

After all, "as a trader, if I look at the daily chart, it's been very, very bearish," Keene said Wednesday, perhaps at the risk of stating the obvious.

Correction: One of the research notes is from Ladenburg Thalmann. An earlier version misstated the name.

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