Micron Technology Inc.’s shares received price increases from more than half of the analysts who followed them on Friday and lowered their resistance selling rating due to the strong growth expected in 2021.
Thursday afternoon, Micron MU,
confirmed that the memory chip market is changing the results of the reports and a prospect that has outpaced Wall Street estimates, adding that the outlook would have been stronger had it not been for the lack of memory chips hampering production in the computer industry.
Micron dropped its final “sale” rating when Morningstar analyst Abhinav Davuluri raised its stock rating to three stars, or a retention rating, to two stars, and raised its target price from $ 50 to $ 65.
“We believe Micron is well positioned to enjoy double-digit revenue growth in fiscal 2021, thanks to the increased memory content associated with AI, cloud, 5G and new game consoles,” said Davuluri.
Of the 35 analysts covering Micron, 29 have buy or overweight ratings of shares and six have retention ratings. Of these, 22 analysts increased their stock price targets, resulting in an average price target of $ 97.23, compared to $ 85.50 before the report, according to FactSet data.
Evercore ISI analyst CJ Muse, who has a higher performance rating and raised his target price from $ 90 to $ 105, indicated that Micron is definitely at the bottom of its cycle and can only move up from here.
“Let’s keep things simple – DRAM has hit rock bottom,” said Muse. “And the outlook is bright, supported by 2 years of underutilization of supply, along with growth drivers led by 5G, AI, cloud and a recovery in the automotive / industrial sector that must support supply constraints as we move through 2021 and potentially beyond ”.
Micron specializes in DRAM and NAND memory chips. DRAM, or dynamic random access memory, is the type of memory commonly used on PCs and servers and was responsible for 70% of Micron’s $ 5.77 billion revenue in the first fiscal quarter. NAND chips are the flash memory chips used in USB drives and smaller devices such as digital cameras.
Citi Research analyst Christopher Danley, who has a buy rating and raised his target price from $ 110 from $ 110 to $ 113, said the recovery at DRAM “should take at least a year”.
“After a false start in 2020, we expect DRAM prices to sustain their upward trend starting in 1Q21, given the biggest supply / demand imbalance since 2017,” said Danley. Last year, Micron had also hit rock bottom in the memory chip market, which suffered from a year-long oversupply.
“We expect DRAM supply to grow + 16.8% YoY in 2021, below the DRAM demand growth of + 20.1% YoY,” said Danley.
Cowen analyst Karl Ackerman, who has a superior performance rating and raised his target price from $ 80 to $ 90, noted past results that were driven by an accounting change and a lack of share buyback during the quarter .
“A favorable accounting shift in a rising price environment and the absence of buybacks can be critical points for bears,” said Ackerman. “However, MU enters the F21 with arguably the best product portfolio in the industry, which should allow it to capitalize on growing demand.”
Micron’s shares fluctuated between light gains and losses in Friday’s trading. On the other hand, the stock rose more than 5% in the week, as analysts raised their valuations before earnings. The stock closed at $ 79.11 on Thursday, its highest value since August 31, 2000, when it closed at $ 81.75.
In the past three months, Micron’s shares have risen 60%, compared to a 25% increase in the PHLX SOX semiconductor index,
an 11% increase by the S&P 500 SPX index,
and a 15% gain from the Nasdaq Composite Index COMP,
Compare that to the last 12 months, where Micron gained 39% gain and the SOX index rose 58%.