On Thursday, Nanya Technology Corp (2408:TT) saw its stock rating downgraded by a Citi analyst from 'Buy' to 'Sell'. The price target was also significantly reduced to NT$30.00, a steep decline from the previous NT$85.00. The downgrade reflects concerns about the company's product mix and its impact on future earnings.
Nanya Technology, known for its specialty DRAM products, has approximately 70% of its sales tied to commoditized legacy memory. The analyst highlighted that the company is likely to face challenges in maintaining profitability as the memory market experiences a pricing decoupling between premium and conventional memory products.
The industry's shift towards high bandwidth and high-density products by 2025 is anticipated to influence market dynamics significantly. The analyst's revised outlook for Nanya Technology's operating profit estimates for 2025 to a loss of NT$13.5 billion from a previous estimate of a NT$12 billion profit. This drastic revision is based on a projected 0.7x 2025 price-to-book value (PB), which is attributed to the weak outlook for legacy memory products.
The report further mentions the potential impact of increased production of LPDDR4 and DDR4 by competitor CXMT, which could lead to an oversupply in the legacy market. This scenario is expected to negatively affect Nanya Technology's position in the market.
Citi's new price target of NT$30 for Nanya Technology is a reflection of the anticipated challenges the company may face as the memory industry evolves. The analyst's comments underscore the expected divergence in earnings between suppliers of premium memory and those reliant on conventional or legacy memory, with Nanya Technology predicted to be among the most affected due to its product mix.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.