Micron Technologies (NASDAQ: MU)
Micron stock jumped over 6% in premarket trade on Wednesday as Wall Street experts predicted the semiconductor company’s decline would be less than it really was.
Micron Technologies (NASDAQ: MU) is “well positioned,” especially as the data center improves, according to Tom O’Malley, an analyst at Barclays who has an overweight rating and a $70 per share price target on Micron (MU). He also noted that “persistent” weakness in several end markets has pushed the recovery back, resulting in lower book value for Micron (MU).
Despite the Micron stock’s reset price, O’Malley and the company believe the stock is a good investment because “the name fits into the AI concept that is a major driver for the [data center] sector into the next [fiscal year].”
Vivek Arya, a Bank of America analyst who rates Micron (MU) shares neutral, agrees that there is “no fast answer.” Still, he adds that the memory market’s downturn is beginning to abate, so even if Micron delivers fewer products and loses a “moderate share” to Samsung, the company will likely recover (OTCPK:SSNLF).
When PC/smartphone inventories increase, and new data center/AI product cycles help fuel memory demand, Arya predicted that the industry will hit bottom around the second quarter of the fiscal year.
Micron reported a loss of $1.34 per diluted share after writing down $1.43 billion in inventory in connection with its fiscal second-quarter results.
Arya said the corporation may gain from reshoring and the United States, despite the “difficult” near-term market for DRAM and NAND. CHIPs Act, since it is the sole manufacturer of cutting-edge memory chips in the United States.
After the study, Arya reduced his projected profits for 2024 and 2025.
Harlan Sur, an analyst at JP Morgan, reaffirmed the firm’s overweight rating and increased the share price objective to $75 from $65, citing “excellent progress” on excess inventories but said that more work has to be done.
In an investor letter, Sur said, “As the firm manages through one of the harshest memory downturns, the team is beginning to see some light at the end of the tunnel with inventory levels steadily improving across a wide group of end markets with a look towards bit demand growth in the [second-half].”
With “severe” supply reduction, inventory write-downs, and an improved demand environment, Sur said Micron’s (MU) stock is anticipated to continue moving in a “positive direction” as the year progresses. Investors begin to discount the revenue and price rebound in the second half.
Although the DRAM market and Micron’s margins seem to be bottoming out, Citi analyst Christopher Danely maintained his buy rating and $75 per share price objective after the results.
As DRAM supply is below demand, Danely predicted that “this quarter signals the bottom for Micron EPS and the stock.” The stock hit rock bottom the last time Micron had negative gross margins; we’d like to point everyone out.
SL Investments, a contributor to Seeking Alpha, said that Micron’s results constitute a “strong buy signal” since the memory cycle seems to have bottomed. The business stands to gain from the United States’ tough stance towards China.
Citi said earlier this month that Micron was one of the “least popular” semiconductor companies among investors.
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