Micron Technology Stock Can Reach $55 Within a Year, Says Top Analyst

Mizuho's Vijay Rakesh now angles for 25% in return potential for Micron shares.


Micron Technology, Inc. (NASDAQ:MU) shares bounced 11% yesterday for two reasons: a) former CFO of Analog Devices is coming to fill CFO Ernie Maddock’s role after retirement- and David Zinsner’s esteemed reputation precedes him; b) the memory chip giant is hiking its second fiscal quarter earnings and revenue guides for 2018, beating out Street-wide expectations.

With a second fiscal quarter print anticipated by March 22nd, the MU team dialed up its prior guide placing revenue at $7 billion and EPS between $2.51 and $2.61, the company now angles for $7.27 billion in revenue and stronger-than-anticipated EPS between $2.70 and $2.75.

Top analyst Vijay Rakesh at Mizuho wagers that “this puts concerns over the quarter to rest” regarding ghosts of declining memory price trends hitting Micron.

Likewise praising “another respected CFO” in the choice of Zinsner, the analyst reiterates a Buy rating on MU stock while bumping up the price target from $50 to $55, which implies a 25% upside from where the shares last closed.

“As we have noted, NAND and DRAM pricing has been strong despite the concerns of oversupply and demand softness (iPhone X, China). We believe with another respected CFO at the helm and entering into a stronger build season, MU is well-positioned,” asserts Rakesh.

As Zinsner prepares to take on Maddock’s shoes in the next two weeks, Rakesh commends the “big addition,” noting: “While Ernie has done an excellent job steering MU for a ~200% upward move in the stock, we believe David Zinsner is well-respected and one of the best CFO’s on the street at ADI. With his disciplined, conservative style, he should be a welcome addition to MU. We believe Ernie is taking some well-deserved time off with family and wish him well in his future endeavors.”

On back of an improved second fiscal quarter guide, the analyst is following suit, taking his revenue expectations up from $7 billion in revenue and $2.55 in EPS to $7.3 billion and $2.72. Additionally, for fiscal 2018, the analyst lifts his total revenue expectations from $27.6 billion to $28.4 billion and dials up EPS from $9.73 to $10.07. Glancing ahead to fiscal 2019, the analyst likewise has more confidence, increasing his revenue forecast from $26.8 billion up to $28.7 billion and EPS from $8.36 to $9.08.

Bottom line, with a stellar choice for new CFO to lead Micron “and against a backdrop of continued strong fundamentals, annual EPS running at $10/shr with GM at a historical high at ~56-57%, plus cost reductions, MU presents an attractive opportunity as one of the cheapest memory suppliers,” Rakesh contends, noting that MU shines as “one of the cheapest global memory suppliers.” This is “an attractive investment opportunity,” cheers the analyst.

Vijay Rakesh has a very good TipRanks score with a 72% success score and a high ranking of #19 out of 4,736 analysts. Rakesh yields 29.4% in his annual returns. When recommending MU, Rakesh gains 54.7% in average profits on the stock.

TipRanks underscores a strong bullish analyst consensus backing this chip giant, with 17 out of 19 analysts polled in the last 3 months rating a Buy- and just 2 maintaining a Hold on MU stock. With a solid return potential of 35%, the stock’s consensus target price stands at $59.25.