On Tuesday, Citi adjusted its price target for Nanya Technology Corp (2408:TT) shares, a semiconductor company specializing in Dynamic Random-Access Memory (DRAM) products. The new target is set at NT$85.00, decreased from the previous NT$90.00, while the firm sustained a Buy rating on the stock.
The revision comes amid a notable decoupling of DRAM spot prices from contract prices, an occurrence not typically seen in the industry. This divergence has been attributed to a substantial inventory of legacy DRAMs and a lukewarm demand in the end markets. These factors have exerted pressure on Nanya Technology's earnings, as the company's offerings are predominantly legacy DRAMs.
Citi's analyst pointed out that the adjustment in the price target to NT$85.00 from NT$90.00 is a reflection of the downward earnings revision. Despite this, the firm maintains a positive outlook on Nanya's shares, anticipating a potential earnings recovery. The projection is based on the expectation that the current inventory surplus of legacy DRAMs will be resolved, leading to an improved financial performance for Nanya Technology.
The analyst's commentary underscores the unique situation in the DRAM market, where spot and contract prices are not moving in tandem as they traditionally have. This has had a direct impact on Nanya, prompting the price target revision.
While the current market dynamics present challenges for Nanya Technology, Citi's continued endorsement with a Buy rating suggests confidence in the company's ability to navigate through the inventory digestion period and recover its earnings trajectory in the foreseeable future.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.