Micron Technology saw an increase in its stock price on Monday after an upgrade from Deutsche Bank analyst Sidney Ho. The upgrade comes as a result of recent improvements in demand for the company’s products.
Ho upgraded shares of Micron (ticker: MU) from Hold to Buy and raised the price target for the stock from $65 to $85. This indicates a potential 22% increase from the closing price on Friday.
In a research note, Ho highlighted the factors that led to the upgrade. Previously, concerns about excess inventory and weak macro end-demand had kept the analyst neutral on Micron. However, Ho now believes that the worst of the downcycle is behind the company, thanks to aggressive production cuts by suppliers and pockets of demand strength, particularly in AI servers.
One of the challenges Micron had been facing was low prices for dynamic random-access memory (DRAM), a type of semiconductor memory commonly used in computers and smartphones. Ho noted that there has been recent strength in DRAM pricing, which he expects to be sustainable and accelerate over the next two quarters.
During the Deutsche Bank Technology Conference in August, Micron’s Chief Financial Officer Mark Murphy expressed optimism about pricing, stating that he believed prices would strengthen throughout the second half of the calendar year as long as supply discipline was maintained and volume continued to expand.
Based on these positive developments, Ho predicts that Micron will guide first-quarter revenue and earnings above current Wall Street estimates. He also anticipates further improvement in the coming quarters. As a result, he expects Street estimates for Micron’s performance in CY23 and CY24 to increase significantly after the earnings report.
Micron is scheduled to report its fiscal fourth-quarter earnings on September 27, after the closing bell.
On Monday, Micron’s stock rose by 1% to $70.58. So far in 2023, the stock has gained 41%.