tiprankstipranks
What Does the Near-Term Have in Store for Micron? Analyst Weighs In
Stock Analysis & Ideas

What Does the Near-Term Have in Store for Micron? Analyst Weighs In

Semiconductor stocks have been on a tear in 2020, but the same cannot be said about one of the sector’s heavyweights – Micron (MU).

Hampered by a series of negative macro events and the loss of a big chunk of revenue due to the recent ban on Huawei, the company has suffered at the hands of Mr. Market and has been struggling to swing into the green in 2020.

However, despite the company issuing soft estimates, the stock has mostly trended upwards since late September when Micron delivered strong FQ4 results.

So, is the trend likely to continue?

Based on competitor SK Hynix’ latest quarterly results, recent commentary from Samsung and semi cap equipment providers, Raymond James analyst Chris Caso has been assessing what the near term has in store for Micron.

“The commentary generally aligns with our thesis for a rebound in DRAM next year, with a more challenging environment for NAND,” Caso said.

For DRAM, Caso believes the industry is anticipating “mid-teens to 20% year-over-year bit growth, with some rebound after datacenter customers complete inventory digestion by year-end.”

Whilst for NAND, the industry forecast is for bit demand to improve next year “to the low to mid 30s  year-over-year.”

However, Samsung is the market leader for both DRAM and NAND. Caso thinks the electronics giant might throw a spanner in the Micron works, where the latter is concerned.

“Our concern in NAND has been Samsung’s stated intention to increase capex and to consolidate market share, given their cost advantage, perhaps offset over the longer term by the Intel/hynix consolidation,” Caso said, before making reassuring noises. “Nonetheless, with our estimates assuming about 75% of FY22 Micron revenue from DRAM, we think that’s enough to drive margins and earnings higher next year.”

Overall, Caso rates Micron a Strong Buy, and has a $65 price target for the shares. What’s in it for investors? Possible upside of 18%. (To watch Caso’s track record, click here)

Amongst Caso’s colleagues there are plenty of other MU bulls. Based on 18 Buys and an additional 6 Holds, the analyst consensus rates the stock a Moderate Buy. At $61.41, the average price target suggests possible upside of 11% in the year ahead. (See Micron stock analysis on TipRanks)

To find good ideas for tech stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

Trending

Name
Price
Price Change
S&P 500
Dow Jones
Nasdaq 100
Bitcoin

Popular Articles