Nomura analyst Romit Shah offers insight on shares of Micron Technology, Inc. (NASDAQ:MU), providing a bullish forecast ahead of what the analyst deems an “almost inevitable” manufacturing partnership with China, which would “expand the company’s footprint and improve profitability.”
As such, Shah reiterates a Buy rating on MU with a $23 price target, which represents a nearly 32% increase from where the stock is currently trading. While the analyst sees DRAM as cyclical, positively for MU, Shah believes that presently “we are in the midst of an uptrend in pricing,” with spot pricing on a 27% increase as of June.
The analyst notes, “Silicon represents one of the biggest gaps in the country’s trade deficits. As such, China is looking to capture a larger share of the global semiconductor industry by producing more devices such as memory, logic and processors that go into consumer, automotive and industrial markets.”
“However, we know that IP, technology and brand create high barriers. As such, we believe China is looking to partner with incumbents in the space. At the same time, we believe Micron is looking to strengthen its positioning in NAND against rivals such as Samsung and Intel,” Shah adds.
Ultimately, “While investors should own MU today for a recovery in DRAM, we believe that a manufacturing partnership with China is a kicker to shares,” the analyst concludes.
As usual, we like to include the analyst’s track record when reporting on new analyst notes to give a perspective on the effect it has on stock performance. According to TipRanks, five-star analyst Romit Shah is ranked #221 out of 4,172 analysts. Shah has a 62% success rate and gains 9.8% in his annual returns. When recommending MU, Shah earns 7.5% in average profits on the stock.
TipRanks analytics indicate MU as a Buy. Based on 21 analysts polled in the last 3 months, 16 rate a Buy on MU, 4 maintain a Hold, while 1 issues a Sell. The 12-month price target stands at $18.56, marking a 6% upside from where the shares last closed.