Next Tuesday, Micron Technology, Inc. (NASDAQ:MU) gears up to deliver its first fiscal quarter print, and one bull is coming out with even more confident expectations after looking into supply chain checks. The verdict? DRAM trends in the fourth quarter of calendar 2017 continue to look “positive,” and supply/demand trends approaching the first quarter of calendar 2018 likewise shine advantageously.
MKM analyst Ruben Roy finds that “memory trends appear to remain largely favorable,” and takes the recent pullback in the chip giant’s shares as a compelling prospect to invest. While there have been fears running rampant that flash memory prices are facing a downturn, the analyst believes memory markets boast “favorable” trends that have Roy enthusiastic into next year.
As such, the analyst maintains a Buy rating on MU stock while bumping up the price target from $52 to $54, which implies a 27% increase from where the stock is currently trading. (To watch Roy’s track record, click here)
“On the NAND side, while bit growth is widely expected to increase in 2018, we believe that ASP expectations largely reflect potential supply improvement. In the meantime, recent industry data points suggest that overall NAND bit growth in 2018 may not be as strong as expected. MU shares have declined roughly 15% from a late November peak, considerably underperforming the SOX over the same time period (SOX -8%),” writes the analyst.
Overall, Roy concludes on an upbeat note, setting high expectations for Micron ahead of next week’s earnings showcase: “Aside from recent sell-off, MU shares have traded at a valuation that suggests skepticism relative to the longer-term sustainability of the current memory cycle throughout 2017. We believe that the continued favorable supply/demand environment will extend into 2018 and this, coupled with continued cost reduction catalysts specific to MU, should ultimately yield multiple expansion.”
TipRanks highlights a Wall Street that leans strongly towards the bulls when it comes to Micron’s opportunity in the market, with 21 of 23 analysts in the last 3 months rating a Buy on the chip giant and just 2 maintaining a Hold on the stock. With a solid return potential of nearly 28%, the stock’s consensus target price stands at $53.86.