3 Apple Suppliers Tumbling on iPhone X Production Woes

All 18 analysts covering AVGO say it's a strong buy

by Karee Venema

Published on Jan 29, 2018 at 3:25 PM

The U.S. stock market is pulling back from record highs, as shares of Apple (NASDAQ:AAPL) retreat on reports the tech titan has halved its first-quarter iPhone X production target. The speculation has shares of Apple suppliers selling off, too, with Broadcom Ltd (NASDAQ:AVGO), Cirrus Logic, Inc. (NASDAQ:CRUS), and Micron Technology, Inc. (NASDAQ:MU) among those trading lower today. Here's a closer look at how the chip stocks are faring at last check.

Broadcom Shares at Risk for Downgrades

Broadcom stock was down almost 3% at its session low, and was most recently seen trading 2.5% lower at $244.56. What's more, AVGO shares are on track to close south of their 200-day moving average for the second time in three days -- which hasn't happened since early 2016. However, the stock has struggled since topping out at a Nov. 27 record high of $285.68, and is pacing for its first back-to-back monthly losses since October 2016.

Should AVGO stock continue to struggle, there's plenty of room for analysts to downwardly revise their ratings. While all 18 brokerages maintain a "strong buy" recommendation on Broadcom shares, the average 12-month price target of $315.50 stands at a 28% premium to current trading levels.

Cirrus Logic Stock Stares Up at Stiff Resistance

Cirrus Logic shares were off 1.6% earlier, but have since pared this loss to 0.5% to trade at $51.07. The stock has charted a path of lower highs and lows since notching a record high of $71.97 on June 9, with a recent rally off its early December annual low being quickly contained by its formerly supportive 120-day moving average.

Short sellers, meanwhile, ramped up their exposure to CRUS stock in the latest reporting period -- with these bearish bets climbing 11.07%. They could be hoping for another negative earnings reaction for Cirrus Logic, after it reports next Monday, Feb. 5. Following the company's fiscal third-quarter results one year ago, CRUS shares plunged 14% in the subsequent session.

Micron Stock Put Options Cheap Amid Pullback

Micron stock has given back 1.6% so far today to trade at $42.97, following an unsuccessful test of its recently supportive 80-day trendline. The shares have been trading in a tight channel between $42 and $47 since early December, after a late-November bear gap sent MU tumbling from its 17-year high of $49.89, hit on Nov. 22.

In spite of these recent technical troubles, Micron put options are currently pricing in low volatility expectations relative to calls. MU's 30-day implied volatility skew of negative 2.3% ranks in the 5th percentile of its annual range.

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