BING-JHEN HONG
Micron Technology (NASDAQ:MU) was in focus on Monday as investment firm Baird upgraded the memory maker and added it to its list of top semiconductor ideas.
Shares rose 4.8% in mid-day trading.
The firm acknowledged that it is “catching the train a bit late” with the upgrade, though it still sees “meaningful upside opportunities ahead,” especially in light of the recent pullback in the stock. This should lead to a “somewhat unprecedented outlook for memory over the next 12–18 months,” analyst Tristan Gerra said.
“DRAM pricing is stronger than previously expected with increasing mix of premium-priced DDR5, while HBM3E has the potential to generate 60%+ gross margin for Micron next year,” Gerra added. He raised his rating on Micron to Outperform and bumped his price target to $150 from $115.
There is the belief that as high-bandwidth memory use turns into a “super cycle,” it could result in 20% of Micron’s total dynamic random access memory revenue by 2025, with 150% growth expected next year, Gerra added.
Micron is also seeing an “improving mix” of its double data rate product, DDR5, which now accounts for more than 50% of the company’s production, Gerra said.
Along with the upgrade, Micron is now on Baird’s top ideas list, along with Nvidia (NVDA), Broadcom (AVGO) and Semtech (SMTC).
Analysts are largely cautious Micron on MU (MU). It has a HOLD rating from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha’s quant system, which consistently beats the market, rates MU a HOLD.
