Consumer Electronics Show (CES) 2018 has come to a close, and looking back, it was a really interesting week.
On day one at the CES, Goldman Sachs analyst Mark Delaney met with Micron Technology, Inc. (NASDAQ:MU) management team, which was generally optimistic regarding the memory business in 2018, especially in datacenter.
With respect to NAND, “Micron continues to expect 2018 NAND industry bit growth to approach 50% yoy, but also that costs can decline 25-30% so that industry margins can still expand if pricing declines by less than that. In addition, Micron noted that the HDD market is significantly larger than SSDs, and that large parts of the SSD market are now close enough on price to HDDs such that if NAND pricing does fall it can allow SSDs to replace HDDs more quickly,” Delaney wrote.
What about DRAM? “Micron reiterated its positive view on 2018 DRAM supply/demand, with particular strength in servers and in the datacenter. Micron suggested it hasn’t seen a change in its business due to the CPU security issues, but that it is still very early. Micron management said that there is some chance that DRAM could be used to help solve any performance issues to the extent that software is insufficient.”
Micron is also gearing toward the autonomous vehicle market: “Micron noted that in a fully autonomous environment cars could have 40 GB of DRAM and 1 TB of NAND storage. We believe that automotive DRAM remains a small but fast growing part of the market and that Micron has a strong market position.”
As such, Delaney reiterated a Buy rating on Micron shares, with a price target of $55, which represents an upside of 28% from today’s closing price. (To watch Delaney’s track record, click here)
Wall Street backs Delaney’s bullish bite into the semiconductor giant as well, as TipRanks analytics exhibit MU as a Strong Buy. Out of 20 analysts polled in the last 3 months, 17 are bullish on Micron stock, while 3 remain sidelined. With a return potential of nearly 35%, the stock’s consensus target price stands at $58.41.