J.P. Morgan Pounds the Table on Micron (MU) Stock


Micron (MU) is warming up to post its fiscal fourth-quarter results this afternoon, and one analyst sees upside potential in the stock, as the the chip giant is executing well in an overall constructive S/D memory environment.

While investor sentiment is dreadful going into the company’s print, J.P. Morgan analyst Harlan Sur is out pounding the table on Micron shares, reiterating an Overweight rating and price target of $84, which implies an upside potential of over 80% from current levels. (To watch Sur’s track record, click here)

Sur opined, “Despite bearish sentiment on MU following the company’s analyst day that was held in May on “2H18 peak pricing” and “2019 downturn cycle” fears, we continue to see significant upside in OW-rated Micron. We expect broader supply/demand fundamentals to remain in relative balance as suppliers remain rational in adding bit supply, and we believe demand for memory will remain strong and broad-based, with particular strength in datacenter demand, which is MU’s largest end-market with DRAM and NAND at around 30-35% of total sales (and a more favorable end-market mix relative to other memory competitors).”

“For F4Q18, Micron’s August quarter, we expect the company to report results above the midpoint of guidance and provide F1Q19 (November quarter) guidance in line to better than consensus on flattish GMs, but sequential improvement in operating margins offset by higher tax rate that is set to increase meaningfully in FY19. We remind investors that the last two memory downturns were demand driven, not supply-side driven – and with healthy end-market demand trends across datacenter, mobile, PC, gaming, embedded, we don’t see any major demand headwinds in 2H18/CY19 to suggest a demand-driven memory downturn,” the analyst continued.

Net net, Wall Street’s confidence on the chip giant speaks for itself; Micron has received a whopping 17 “buy” ratings in the last three months vs. 5 “hold” rating. Meanwhile, the $75.73 price target suggests a potential upside of nearly 65% from the current share price. (See MU’s price targets and analyst ratings on TipRanks)

 

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