Here’s Why You Should Remain Bullish on Micron (MU) Stock


The challenges before Micron (MU) CEO Sanjay Mehrotra have just begun, but he was made for this moment. He has been riding the memory market for 30 years, co-founding Sandisk in 1988 and serving as CEO until it was bought by Western Digital in 2016.

On Monday, Nomura analyst Romit Shah hosted investor meetings with Mehrotra whereby much of the conversation focused on comparing the current period with the 2015-2016 downcycle. Mehrotra highlighted some important differences about Micron that are worth highlighting as investors contemplate trough valuation:

  • Micron is executing significantly better than in 2015/2016. This is best exemplified by bit growth and product costs versus Samsung.
  • The balance sheet is much stronger than in 2016, thus, giving the company flexibility to reinvest in the business and repurchase stock for the first time.
  • Perhaps the biggest difference between 2016 and now is the behavior of market share leader Samsung.

Shah noted, “In summary, we came away from meetings with Mr. Mehrotra believing that while visibility is limited, Micron is a better company operating in a better industry. This should translate into a higher trough multiple this cycle of at least 1x book.”

As such, Shah reiterates a Buy rating on Micron shares, with a price target of $65, which implies an upside of 46% from current levels.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Romit Shah has a yearly average return of 14.8% and a 58.9% success rate. Shah has a 45.3% average return when recommending MU, and is ranked #352 out of 4883 analysts.

Net net, Wall Street’s confidence backing this chip giant is strong, with TipRanks analytics showcasing MU as a Strong Buy. Based on 24 analysts polled in the last 3 months, 19 are bullish on Micron stock, while 5 remain sidelined. The 12-month average price target stands at $70.13, marking a nearly 57% upside from where the stock is currently trading. (See MU’s price targets and analyst ratings on TipRanks)

 

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