This Top Analyst Just Got Even More Bullish on Micron Technology, Inc. Stock; Here’s Why

Needham's Rajvindra says to ignore waning NAND pricing concerns; MU NAND gross margin have "room to expand.


Micron Technology, Inc. (NASDAQ:MU) investors are sending shares on a nice almost 5% upturn today- and with good reason. The chip giant’s team unveiled last night a new guide for the second fiscal quarter of 2018 lifted by 4%- a solid $270 million raise.

Top analyst Rajvindra Gill at Needham is revving the confidence on the giant, upgrading from a Buy to a Strong Buy rating on MU stock with a $76 price target, which implies an 84% upside from current levels.

Thrilled to spotlight “evidence of two consecutive quarters indicating $10+ annualized earnings,” the analyst is unfazed by a dipping price backdrop. These “concerns over a NAND pricing decline seem overblown to us,” writes Gill. The analyst predicts with enthusiasm, “NAND margins can continue to expand,” a point that likely will be a “key positive catalyst for the stock.”

Additionally, in the wake of CFO Ernie Maddock’s retirement, the MU team revealed David Zinsner would fill in Maddock’s shoes.

“Given this positive pre-announcement, we remain favorable on the memory cycle and believe Micron has room to expand NAND gross margins despite a declining pricing environment. Furthermore, we believe whatever excess NAND supply in the market will be absorbed by demand for client and data center SSDs […] We believe the market is incorrectly applying a trough multiple on peak earnings. Over time, in our view, this disconnect will close and we should see a re-rating in the multiple,” asserts Gill.

The MU has now guided its second fiscal quarter revenue from a range between $6.8 and $7.2 billion up to a range of $7.2 to $7.35 billion. Likewise, Micron angles from a prior outlook of non-GAAP EPS between $2.51 and $2.65 up to a range of $2.70 to $2.75.

Rajvindra Gill has a very good TipRanks score with a 63% success rate and a high ranking of #41 out of 4,732 analysts. Rajvindra Gill garners 20.3% in his annual returns. However, when recommending MU, Gill forfeits 16.4% in average profits on the stock.

TipRanks highlights soaring confidence on the Street when it comes to Micron’s market opportunity. Out of 19 analysts polled in the last 3 months, 17 are bullish on Micron stock with just 2 on the sidelines. With a healthy return potential of 41%, the stock’s consensus target price stands at $57.80.