Micron (MU) Wins a Big Vote of Confidence from Wall Street Firms; Highest Price Target Reaches $115


Following Micron’s (NASDAQ:MU) upbeat and well-attended analyst day and positive pre-announcement, the chip giant received at least six price-target hikes from Wall Street firms. We don’t have time to cover all of Wall Street’s picks and pans, but let’s at least survey two.

Rosenblatt Securities analyst Hans Mosesmann boosted his price target on MU from $100 to $115. That makes it the highest price target of analysts polled by TipRanks. Obviously, the analyst rates MU a Buy. (To watch Mosesmann’s track record. click here)

Mosesmann commented, “Micron executed one of its best investor days we can remember by cementing the case of the structural change in the memory/storage industry with both significant Micron specific operating profit improvements, and a $10 billion share repurchase authorization starting in FY19.”

The analyst continued, “Clearly, we are entering into a new era of prolonged memory cycles (Moore’s Law slow-down moderating supply along with rational behavior), Micron’s execution in reducing the competitive gap, and significant secular content expansion driven by server/datacenter, AI, industrial, autonomous driving, and IoT. Interestingly, Micron continues to focus on technology transitions rather than wafer output expansion in the near-term given important die size improvements. Management indicated that low-30s % of sales would be the target for CapEx which would translate to ~$9.5 billion for FY19.”

Bottom line: “Micron is generating roughly $10 billion in FCF per year going forward and with the improved balance sheet and $10 billion repurchase program for FY19 we believe investors will start to view the shares in a different light in a sustainable fashion.”

MKM analyst Ruben Roy joined the crowd today, noting, “We walked away from the analyst meeting with the following key takeaways from MU’s higher level discussion: 1) MU and its peers are benefiting from the most memory intensive end markets ever with the data driven economy moving memory industry revenue to roughly $128 billion exiting 2017 from average industry revenue of $38 billion during the initial Internet era (2000-2007). MU expects AI applications to be a game changer across a diverse array of end market applications and to continue to drive accelerated demand for DRAM and NAND over the next several years. 2) New process migrations require greater capital intensity and provide reduced bit gain per wafer, which should drive longterm moderation in bit supply growth. 3) Industry supply growth expectations (~20% for DRAM and ~40% for NAND beyond C2018) should support long term industry stability given end demand expectations.”

As such, Roy lifts his price target on MU to $72 (from $65), while reiterating a Buy rating on the stock. (To watch Roy’s track record, click here)

Micron has one of the best ratings by the Street. TipRanks reveals that MU has a Strong Buy analyst consensus rating with 20 buy, 3 hold, and 1 Sell ratings in the last three months. Meanwhile the average analyst price target of $76.43 suggests the stock still has upside potential of just over 29.5% from the current share price for the next 12 months.

 

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