In a research report issued Tuesday, Mizuho’s top analyst Vijay Rakesh provided a few insights on Micron Technology, Inc. (NASDAQ:MU), after the South Korean memory chip maker SK Hynix booked record quarterly profit due to strong demand for high-tech memory chips, and said the DRAM supply shortage that has pushed up prices will continue throughout 2017. Rakesh believes that Hynix commentary and DRAM-NAND pricing trends point to upside to MU’s MayQ Guide.
Rakesh wrote, “While MU has not commented on forward pricing, we believe the company remains conservative, stating on its last earnings call “the pricing curve is much flatter than you usually would see,” and “planning cautiously” while we believe pricing continues to have upside. For the MayQ, we have modeled DRAM/NAND ASPs up 9%/6% q/q (consensus 10%/flat), but we could see further upside as Trendforce (Link) is reporting PC DRAM rising 12%+ in MarQ and another 10-15% q/q in the JunQ. We believe NAND spot pricing is up ~10% in the MarQ and ~4% since the end of February (versus flat consensus).”
“NAND pricing has been rising, a stronger move in MarchApril versus the conservative expectations from MU. We believe moving into mid-year and 2H17, NAND supply could further tighten, driving upside for OEMs MU and WDC. Also MU has noted its 64L 3D-NAND in 2H17 is the smallest die in the industry and could drive ~30%+ cost reductions,” the analyst added.
As such, Mizuho analyst Vijay Rakesh reiterates a Buy rating on shares of Micron, with a price target of $35, which represents a potential upside of 31% from where the stock is currently trading.
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 27.9% and a 72.5% success rate. Rakesh has a 48.9% average return when recommending MU, and is ranked #36 out of 4571 analysts.
Out of the 18 analysts polled by TipRanks in the past 12 months, 17 rate Micron stock a Buy, while 1 rates the stock a Hold. With a return potential of 35%, the stock’s consensus target price stands at $36.41.