Micron 1TB microSD Card-Tray
Courtesy of Micron
Micron Technology shares are trading higher before the company’s November quarter earnings announcement on Thursday, amid growing Wall Street optimism about the outlook for DRAM memory demand and pricing in 2021.
In a preview of Micron’s earnings report, we noted that the company had recently raised its outlook for the quarter; a longer recent review of the company in Barron’s Tech Trader column suggested a potential sharp rebound in earnings could set the stage for considerable stock appreciation.
Citigroup analyst Christopher Danely on Tuesday boosted his rating on Micron (ticker: MU) shares by two notches, to Buy from Sell, lifting his price target to $100, from $35. The analyst writes that the upgrade is “based on our belief that the long-awaited upturn in DRAM (68% of fiscal 2020 revenue) is about to materialize, which should drive upside to Micron [earnings per share] and stock.”
The analyst notes that the stock has appreciated 40% in the last two months “and is trading at a higher valuation than at any time during the previous upturn.” But he adds that “there is still plenty of upside as DRAM upturns usually last two years and supply/demand looks favorable over at least the next year.”
Deutsche Bank analyst Sidney Ho, meanwhile, repeated his Buy rating on Micron shares, raising his target price to $85, from $75. He thinks DRAM pricing is “likely to hit an inflection point” in the current quarter, and that a supply shortage — and higher pricing — is possible in the second half. On the NAND side of the business, he says that “we are past the sharpest price declines in the current cycle although there is less certainty on when pricing could start to increase again.”
And RBC Capital analyst Mitch Steves reiterated his Outperform rating on Micron, lifting his price target to $83, from $57. Steves thinks cyclical stocks like Micron should outperform in 2021, and he asserts that DRAM plays like Micron should outperform NAND-based memory companies. Steves says a continued memory recovery could result in much higher earnings for Micron — he is projecting profits on an adjusted basis of $3.70 a share for the August 2021 fiscal year, jumping to $7 in fiscal 2022.
Micron shares on Tuesday were up 4.1%, to $77.05
Write to Eric J. Savitz at [email protected]
