2 Chip Stocks Hit by the Huawei News

The U.S. is reportedly considering keeping its Huawei ban

by Patrick Martin

Published on Aug 9, 2019 at 10:15 AM

The semiconductor sector is under pressure this morning, after a Bloomberg report indicated the U.S. was considering maintaining its ban on China's Huawei. This comes in response to China's move to stop buying American crops. Two chip stocks that are particularly impacted by this news are Micron Technology, Inc. (NASDAQ:MU) and Skyworks Solutions Inc (NASDAQ:SWKS).

At last check, Micron stock was down 1.8% to trade at $41.86, headed for its second straight weekly loss. After toppling the $48 level in late July, the shares have pulled back, although support has emerged at their 40-day moving average. Year-to-date, MU is still up 30%.

Micron stock has certainly been an attractive target for premium buyers during the past year, in the sense that it's made bigger moves than what the options market was pricing in. This is according to the security's elevated Schaeffer's Volatility Scorecard (SVS) reading of 90, out of a possible 100.

Looking at Skyworks, the stock is down 2.8% to trade at $78.05, on track to snap a three-day winning streak. The shares gapped lower on Aug. 1, in the wake of a subpar quarterly report, with the company citing the Huawei overhang as a catalyst. SWKS has since consolidated in the $76-$80 neighborhood, which coincides with its pre-bull gap levels from February and its 120-day moving average.

Citigroup has come forward today with a price-target cut to $85 from $90. This is indicative of the overall analyst sentiment surrounding Skyworks, with 13 out of 20 in coverage rating it a "hold" or "sell," and the average 12-month price target perched at $86.39.

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