Micron Technology’s latest quarterly guidance did not “clear the decks” for Morgan Stanley. The firm on Friday downgraded shares of the semiconductor company to underweight from equal weight. Morgan Stanley kept its $56 price target for shares. The downgrade comes after Micron reported quarterly earnings in June that missed Wall Street’s expectations, and provided guidance for the upcoming quarter that was also disappointing. “We take issue with the recent sentiment that Micron’s weaker guidance ‘clears the decks’ and makes the stock – and to some degree the group – set up for better outcomes,” analyst Joseph Moore wrote. “While Micron likely guided conservatively relative to their outlook at the time, the market continues to deteriorate, both volume (the primary reason for the weaker guidance) and pricing.” Morgan Stanley is seeing material volume weakness in all markets, which it attributes to inventory issues as opposed to demand. Micron said it would see shipments lower than production this quarter and next, building the company’s inventory into year-end. This could pose an issue next year for the company, according to Morgan Stanley. “Thus far in 2022 we have seen inventory builds through the supply chain, and even through a growing over-supply, customers have tended to keep buffer inventory with anxiety over broader semiconductor shortages,” said Moore. Now, customers are finally starting to lower those buffers as the outlook for demand shifts negatively, setting up uncertainty in 2023. In addition, Micron’s competitors have recently started to offer better prices, in some cases in discounts of 20% or more in exchange for volume commitments. “None of this is driven by buyers negotiating, this is all unsolicited offers from Micron’s competition, per our industry checks – and we would highlight that this is from hyperscale markets that are considerably more robust than PC, smartphone, or enterprise server markets,” Moore said. Micron shares have struggled this year, falling more than 31% in that time. The stock traded more than 4% lower in the premarket Friday. —CNBC’s Michael Bloom contributed reporting.