Micron Technology, Inc. MU reported better-than-expected fiscal-year second-quarter results and issued an upbeat guidance for the third quarter.
The Micron Analysts: Needham analyst Rajvindra Gill maintained a Buy rating on Micron shares and increased the price target from $115 to $130.
Rosenblatt Securities analyst Hans Mosesmann reiterated a Buy rating and hiked the price target from $150 to $165.
Raymond James analyst Chris Caso reiterated a Strong Buy rating and $120 price target.
The Micron Theses:
Micron to Benefit From Recovery In Memory Cycle, Needham Says: The NAND market is stabilizing, while DRAM is experiencing a favorable environment, capitalizing on tight supply, Needham analyst Gill said in a note. Demand is strong across all end markets, including the automobile industry, which is witnessing component shortages, the analyst added.
The company, the analyst said, is cautious about CapEx, and therefore is targeting matching of long-term industry demand with supply.
The next-gen DRAM and NAND that are in volume production and tightness in DRAM supply will likely drive margin expansion, Needham said.
"We expect MU to benefit from the recovery in the memory cycle, which we believe has exited a super-cycle and is now in a more typical cycle," the firm said.
Related Link: Apple Supplier Foxconn: Chip Supply Shortage Will Hurt Shipments, Last Through 2022
Micron A Beneficiary of Bigger, Longer Memory Cycle, Rosenblatt Securities Says: Severe shortages driven by strong demand in virtually all markets drove Micron's beat and raise narrative last night, Rosenblatt Securities analyst Mosesmann said. The analyst expects the dynamic to continue in calendar 2021, given the upward adjustment of bit demand by the company.
The stabilization of the NAND market, implied by the company, comes as a surprise, the analyst said.
"The direction of CapEx we see as quite bullish and it signals to the industry/competitors moderation and discipline, while signaling to customers that the shortage framework likely extends into 2022," the analyst wrote in the note.
This cycle, the analyst said, will be bigger, longer, and more profitable than any other due to supply-related dynamics, the slowdown of Moore's Law, and significant memory content expansion to feed high-end compute platforms.
Related Link: 2 Chip Stocks Moving On M&A Rumors: Micron, Western Digital Technical Levels To Watch
Micron's Q2 Checked All Right Boxes, Raymond James Says: Micron's second-quarter report checked all the right boxes, with no increase in CapEx, strong pricing, shortages persisting through the year, resumption of buybacks and incremental NAND improvement, Raymond James analyst Caso said.
The biggest catalyst will be the ramp of 1-alpha DRAM, which will both lower costs as well as provide additional volume, without upsetting the favorable supply/demand balance, the analyst said.
The earnings report provides additional confidence in Raymond James's upside $13 earnings power scenario, since margin improvement is occurring earlier than expected, he added.
Micron Price Action: At last check, Micron shares were at 4.74% to $92.40 on Thursday afternoon.
Related Link: Memory Chipmaker Micron Raises Q2 Guidance Above Street Forecasts
(Photo: Micron Technology)
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