Shares of Micron Technology Inc. they received price increases from more than half of analysts following it on Friday and downgraded their sell-off rating following the strong growth expected in 2021.
Late Thursday, Micron MU,
confirmed that the memory chip market is returning to reporting results and a outlook that exceeded Wall Street estimates, adding that the outlook would have been stronger if there were no shortages of memory chips hindering production in the computer industry.
Micron released its latest sell rating, while Morningstar analyst Abhinav Davuluri raised its rating to three stars, or a hold rating, from two stars and raised its target price to $ 65 from 50 USD.
“We believe that Micron is well positioned to enjoy double-digit revenue growth in fiscal year 2021, due to the increased memory content associated with AI, cloud, 5G and new game consoles,” Davuluri said.
Of the 35 analysts covering Micron, 29 have stock or overweight valuations on shares and six have a holding rating. Of those 22 analysts, they increased their share 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, which performed better and raised its target price to $ 105 from $ 90, indicated that Micron is definitely at the end of its cycle and can only grow from here.
“Let’s simplify it – DRAM has hit rock bottom,” Muse said. “And the outlook is bright, supported by 2 years of insufficient supply spending, along with growth factors driven by 5G, AI, Cloud and a recovery in the auto / industrial industry, which should support supply constraints as we go through in 2021 and potentially after.
Micron specializes in DRAM and NAND memory chips. DRAM, or dynamic random access memory, is the type of memory commonly used in PCs and servers and accounted for 70% of Micron’s $ 5.77 billion revenue in the first fiscal quarter. NAND chips are 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 price target to $ 113 from $ 110, said the DRAM recovery “should take at least a year.”
“After a false start in 2020, we expect DRAM prices to sustain their upward trajectory from 1Q21, given the largest imbalance between supply and demand in 2017,” Danley said. Last year, Micron also won a spot in the memory chip market that suffered from a one-year shortage of supplies.
“We forecast an increase in supply of DRAM + 16.8% per year in 2021, below an increase in demand for DRAM of + 20.1% per year,” said Danley.
Cowen analyst Karl Ackerman, who performed better and raised his price target to $ 90 from $ 80, analyzed previous results that were boosted by a change in accounting and a lack of share buybacks during the quarter.
“A favorable accounting change in an environment of rising prices and the absence of redemptions can be bottlenecks for bears,” said Ackerman. “However, MU is entering F21 with the best product portfolio in the industry, which should allow it to capitalize on expanded demand.”
Micron shares fluctuated between slight gains and losses on Friday trading. Then again, the stock rose more than 5% a week as analysts improved their stock ratings before gains. Shares closed at $ 79.11 on Thursday, the highest final score since August 31, 2000, when they closed at $ 81.75.
In the last three months, Micron shares have accumulated 60%, compared to a 25% increase in the PHLX Semiconductor Index SOX,
an increase of 11% with the S&P 500 SPX index,
and a 15% gain from the Nasdaq Composite Index COMP,
Compare this to the last 12 months when Micron gained 39% and the SOX index rose 58%.