Investors are becoming more bullish on Micron’s (MU) stock.
After an up-and-down 2018, Micron is up 17% in 2019, as trends that plagued the stock are beginning to show signs of reversing. For example, while the China-US relationship showed signs of complete fracture last year, things have calmed down and there is more optimism over a resolution to the trade conflict. Furthermore, US macroeconomic events seem to be playing well for the semiconductor manufacturer, as the Federal Reserve indicated it would not raise interest rates. And of course, there is the company itself — investors pulled out in huge numbers in 2018, plummeting share prices. Slowly but surely, investors have came back aboard, which has contributed to 2019’s rise.
Mizuho Securities analyst Vijay Rakesh believes this trend is here to stay, as he maintains his Buy rating on MU stock, though lowers his price target to $45.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Vijay Rakesh has a yearly average return of 20.9% and a 61% success rate. Rakesh has an average gain of 43.8% when rating MU and is ranked #65 out of 5,146 analysts.
Raksesh takes a look at DRAM and NAND pricing, saying, “DRAM trends remain challenging with DRAM (average selling prices) down significantly as data center OEMs continue to digest excess inventory with weak China and DC capex slow.” On the NAND side, the analyst says, “after significant 2018/Feb price declines, NAND price declines are moderating though NAND supplier inventory is still high.” Moving forward, the analyst believes, “MayQ pricing trends as it should be a litmus test on inventory digestion and hyperscale demand rebound.”
DRAM ASP declines could be blames on “[soft] Data Center (DC) trends.” The analyst says his “checks in the supply chain continue to point to 1) weak China demand, 2) weak hyperscale ordering trends.” Looking to later this year, he believes “some of the N-T Data center softness could continue into Apr-June with inventory digestion and DRAM pricing headwinds as Data Center FANG Capex has also been slowing.”
On NAND, Raskesh believes “NAND is stabilizing with…DRAMeXchange noting ~12% q/q price declines in FebQ but stabilizing to a down 2% q/q in MayQ/AugQ -though we believe NAND OEM inventory is still high.” The analyst anticipates NAND ASPs to improve in the May quarter “from down 12% to down 5% q/q.”
All in all, semiconductor stocks aren’t quite out of the water yet, but investors are gaining optimism. TipRanks analysis of 26 analyst ratings on Micron shows a consensus Moderate Buy, with 17 analysts recommending Buy, eight recommending Hold and one selling. There is an average price target of $49.40 among the analysts, representing a 22% upside to the stock. (See MU’s price targets and analyst ratings on TipRanks)