Analysts Are All Over The Place With Targets For Micron Technology
Micron Technology Inc., the largest U.S. maker of memory chips used in computers and as storage in mobile devices. Lets take the automotive sector as an example.
Companies are ramping up their autonomous driving efforts, but there is a shortage of flash memory. Self-driving cars have to quickly make massive calculations, then process that information in order to drive themselves. In fact, it is estimated that each autonomous car will generate 1 GB of data per second, which will either be sent to the cloud for processing or be processed in the vehicle. Micron holds the #1 market-share in the automotive sector.
Let me give you another example for application of Micron Technology’s products.
The Internet of things market is expected to grow at a ~ 30 - 40% CAGR over the next 5 years. The eventual billions of sensors will have to store and process that data and memory makes this all possible. Once again, Micron is also well positioned to be a major player in this space as well.
After the close on Monday, Micron will be announcing their quarterly earnings and the analysts are on the opposite spectrum when it comes to Micron. Probably the most bullish analyst is Rosenblatt's analysis Hans Mosesmann.
The 5-star analyst has a Buy recommendation on Micron shares, to go hand in hand with a lofty $100 price target. This conveys Mosesmann’s belief that Micron will soar by 107% over the next 12 months.
For the May quarter, Mosesmann anticipates Micron will report revenue of $5.3 billion (up by 10.5% quarter-over-quarter) and non-GAAP EPS of $0.78, matching the company’s pre-earnings announcement.
Looking ahead to the August quarter, Mosesmann expects sales to exhibit a mid-single-digit quarter-over-quarter increase. Improving DRAM and NAND trends - and once more - data center, 5G, notebooks, and game consoles, are all set to drive higher sales. Mosesmann also anticipates smartphone demand to stage a recovery.
But BMO Capital Markets analyst’s Ambrish Srivastava thinks weakness in memory prices are in the cards and future drop in memory prices will last for two or three quarter which isn’t priced into Micron’s stock price yet.
So while Hans Mosesmann has a buy recommendation with a $100 price target, Ambrish Srivastava downgraded the stock to the equivalent of a Hold and reduced his price target to $55 from $60.
I remember when Sandisk many, many years ago was the it company because of the memory sticks, it’s pretty much a commodity now. Memory chips nowadays are a commodity, so Micro and others don’t have any pricing power to raise chip prices. And COVID-19 has to account for some type of impact even if it had an adverse affect on Micron’s supply chain.
And the chart is telling me the same thing, in terms of memory chips being a commodity. Although momentum is to the upside, the stock price still couldn't take out the highs of 2018 even though the broader equity markets have made new highs since that time. To me the stock is broken and I would risk my hard earn money on another stock.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advice. Do your own research before making investment decisions.
Posted Using LeoFinance
