Micron (NASDAQ:MU) shares rose nearly 18% in the past two weeks as expectation builds for the chip giant’s May 21 analyst day in New York City. Indeed, Mizuho’s top analyst Vijay Rakesh believes the event could be a catalyst as it may reinforce a positive 2H outlook with iPhone/holiday build season, and as NAND/DRAM pricing exiting the JunQ remains stable.
Rakesh noted, “We believe the focus will be on: 1) F19E capex, as investors have been sensitive to capex and fab capacity spends; 2) thoughts on deleveraging/buybacks/dividends; 3) the outlook for NAND-DRAM supply, demand and inventory in 2H; and 3) the ramp of 1x/1y/1z nm DRAM and 64/96L NAND. With MU off 10% + from recent highs, we see an attractive entry point and remain buyers.”
“While we believe capex will be a key focus at the investor day on Monday, we believe MUs latest guide of on the higher end of its capex estimates could still be in the 26-27% range of revenue, below the company’s LT target of 30% of revenue. MU continues to drive a solid ~$8B in FCF, with the potential to drive significant deleveraging, buybacks and any aspirational dividends,” the analyst continued.
Rakesh reiterates a Buy rating on MU stock, with a price target of $70, which implies an upside of 30% from current levels.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, 5-star analyst Vijay Rakesh has a yearly average return of 29.6% and a 73% success rate. Rakesh has a 59.6% average return when recommending MU, and is ranked #22 out of 4800 analysts.
How does Rakesh’s bullish bet measure up against the word of the Street? Quite on point, it seems, considering TipRanks analytics exhibit MU as a Strong Buy. Out of 22 analysts polled in the last 3 months, 18 are bullish on Micron stock while 3 remain sidelined and 1 is bearish on the stock. With a return potential of 37%, the stock’s consensus target price stands at $73.95.