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Attention High Risk/Reward Tolerance Investors: Look At Micron

Attention High Risk/Reward Tolerance Investors: Look At Micron

Tight supply-demand dynamics and rising prices in the memory cycle will likely enable Micron Technology, Inc. (NASDAQ: MU) to return to year-over-year earnings and revenue growth in F2017, Loop Capital Markets’ Betsy Van Hees said in a report.

She maintained a Buy rating on the company, with a price target of $27.

“With the positive DRAM data points and our industry checks continuing to point to favorable near-term NAND supply/ demand dynamics, we recommend investors with a higher risk/reward tolerance take advantage of the recent weakness to add to positions,” Van Hees wrote.

Positive DRAM Data Points

According to DRAMeXchange data, DRAM spot ASPs [average selling prices] have risen by 12 percent in January to $3.17. Prices have increased by 23 percent quarter-to-date.

“We view the continued momentum upward in DRAM spot pricing as a positive indicator that we will see continued increases in contract prices as there is a large delta between spot and contract pricing,” Van Hees mentioned.

PC Shipments

Gartner’s PC shipment data for Q4 2016 indicates a -3.7 percent year-over-year decline, with a 5.3 percent sequential increase in PC shipments, which “we view as a positive read thru to MU and the PC supply chain,” the analyst added.

NAND Supply

Industry checks continue to point to tight NAND supply. While the DRAM supply-demand dynamics are expected to remain favorable through 2017, since no additional capacity is expected to come on line from the DRAM suppliers, the NAND supply-demand dynamics are expected to be in balance in the back half of the year, as memory suppliers ramp 3D NAND fabs, Van Hees stated.

Latest Ratings for MU

Mar 2021Goldman SachsMaintainsBuy
Mar 2021NeedhamMaintainsBuy
Mar 2021KeyBancMaintainsOverweight

View More Analyst Ratings for MU
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