Micron Technology, Inc. (MU) DRAM 3Q Pricing Guide Soaring Beyond Expectation

This Chip Giant's Valuation Looks Attractive, Cheers Baird


Micron Technology, Inc. (NASDAQ:MU) DRAM pricing guide for the third quarter is looking more robust than Baird analyst Tristan Gerra had anticipated, and with DRAM trends for the back half of the year tracking higher than previous forecasts, the stock’s value is appealing.

As such, the analyst reiterates an Outperform rating on shares of MU with a $48 price target, which represents a 56% increase from where the stock is currently trading. (To watch Gerra’s track record, click here)

Gerra notes, “DRAM inventories at both PC and data center OEMs remain below normal levels, with continued inventory replenishments now expected through 1H18. – We previously thought these replenishments would be completed by end of C3Q17.”

Additionally, with initial DRAM supply bit growth guide for next year standing at roughly 20%, the analyst believes, “Rexchip’s 1xnm ramp could help Micron gain DRAM market share in 2018, in our view. – New hardware features in PCs could potentially prevent units from declining next year, post an expected low-single-digit growth this year.

Attributing the surging strength in pricing guide for both third and fourth quarter to “[…] healthy growth in notebooks along with continued double-digit content increase in data centers,” Gerra surmises, “DRAM inventory levels still remain below normal levels, which should drive continued demand momentum in 4Q and 1Q, also above our prior expectations. 2018 outlook is positive for DRAM (lack of new geometry node migrations, continued content increases notably in data centers). Micron’s valuation remains attractive.”

TipRanks analytics indicate MU as a Strong Buy. Out of 19 analysts polled by TipRanks in the last 3 months, 17 are bullish on Micron stock while 2 remain sidelined. With a return potential of nearly 38%, the stock’s consensus target price stands at $42.00.

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