Micron Technology, Inc. (MU) Can Rise on Back of Short-Term NAND Supply Tightness, Apple Inc. (AAPL) Watch Series 3 Poised to Be a Holiday Gains Maker

Harlan Sur: MU at a key NAND advantage; Daniel Ives: AAPL attracting new customers to buy Apple Watches.


Micron Ready to Offer an Answer in Toshiba’s Wafer Debacle Wake

What will Toshiba’s ransomware attack-incited suspension of its Japanese NAND memory lines the next few weeks spell out for Micron Technology, Inc. (NASDAQ:MU)?

J.P. Morgan analyst Harlan Sur discussed with his equity research colleagues in Asia and opines that Toshiba scrubbed roughly 100,000 wafers, specifically on the heels of 3D NAND production yield challenges- and not due to the noted network problem.

“As a result, in the near term, supply tightness will likely be exacerbated before more supply comes on line in 2018 and should be beneficial for OW-rated MU. Moreover, such tightness should help keep NAND ASPs elevated at least through the remainder of the year, benefiting Micron and other NAND makers. We would point out Toshiba’s reported issue highlights the difficulties in manufacturing high-end semiconductors, which also benefits leaders in semicap equipment such as OW-rated KLAC in process control / yield management as well as LRCX and AMAT. In addition to NAND tightness, DRAM supply remains tight (spot pricing up >30% since the beginning of September) and will also likely remain tight at least through the end of the year and potentially into 2018,” Sur highlights.

Overall, these NAND space circumstances should bode well for the chip giant, as the analyst surmises: “We believe Micron is successfully ramping 64 layer 3D NAND and is well positioned to fill the near-term void and benefit from supply tightness.”

As such, the analyst maintains an Overweight rating on MU stock with a $50 price target, which implies a nearly 23% upside from current levels. (To watch Sur’s track record, click here)

How does Sur’s bullish forecast echo against the word of the Street? Quite positively, it seems, as TipRanks analytics exhibit MU as a Strong Buy. Based on 24 analysts polled by TipRanks in the last 3 months, 22 rate a Buy on Micron stock while 2 maintain a Hold. The 12-month average price target stands at $50.39, marking a nearly 21% upside from where the stock is currently trading.

It Is About to Be a Happy Holiday Season for Apple Investors

GBH Insight analyst Daniel Ives has been checking his Apple Inc. (NASDAQ:AAPL) store list as well as assessing survey data to gauge Apple Watch Series 3 momentum coming off its late September launch. Ives’ verdict? The wearables market could be shaken up with the tech titan’s product, which has burst through “strong out of the gates.”

Apple’s momentum is red-hot on the side of its Series 3 thanks to an enticing new LTE/cellular connectivity feature that is captivating about 80% of consumers the analyst polled, who indicate they want in on this new Watch.   For Ives, “this looks to be a major selling point for Apple Watch sales vs. prior versions given its new standalone product offering.”

In reaction, the analyst reiterates a Highly Attractive rating on AAPL stock with a valuation range between $190 and $200, which represents a 21% to a close to 28% increase from current levels. (To watch Ives’ track record, click here)

Out of every 10 Apple Watch consumers purchasing the new Series 3 that Ives surveyed, the analyst discovered 7 is a new Watch owner, and that these customers already owned iPhones. In other words, these Watch buys are not correlated with upgrades from the past Series 1 or 2.

Ives asserts, “This data point speaks to our belief that the Apple Watch Series 3 could be a ‘game changer’ release for Cupertino to open up this wearables category for the coming years, which is important as the Watch is a gate opener consumer product in our opinion. We believe the cellular model is clearly a catalyst for Watch sales heading into holiday season and will ultimately drive higher attach rates and modestly ‘higher ASPs for this product offering in FY18.'”

“While Apple Watch sales still represents low to mid-single digits of overall revenue, this wearables category is an important product for Apple to further penetrate its massive consumer installed base and lay the groundwork for new product lines/technologies (e.g. AR glasses) over the coming years to complement its ‘bread and butter’ iPhone franchise growth.

Ultimately, the analyst concludes acknowledging that while the iPhone X may unlock the most gains ahead for the tech titan, Apple Watch momentum is further reason to invest in Tim Cook and his team’s technology empire: “While iPhone X is clearly the key to Apple’s growth/stock and we believe is on track to be a super cycle product release over the next 12 to 18 months, early signs of positive Apple Watch sales are a ‘feather in Cook’s hat’ heading into its November 2 earnings call and has clear tailwinds for FY18.”

Wall Street loves Apple, especially taking under account that TipRanks analytics indicate AAPL as a Strong Buy. Out of 29 analysts polled by TipRanks in the last 3 months, 22 are bullish on Apple stock while 7 remain sidelined. With a return potential of nearly 11%, the stock’s consensus price target stands at $176.61.