Optimism continues to build for Micron Technology Inc., with a Cowen & Co. analyst dubbing the stock his “best idea” among big chip stocks to come next year.
Cowen’s Carl Ackerman thinks investors are misunderstanding Micron’s MU,
Story. According to Ackerman, while DRAM spot prices are falling, channel inventory is improving. Perhaps more important, Micron now derives about 75% of its business from long-term agreements, he said, compared to 20% four years ago, which makes the company less adept at changes in spot prices.
The longer-term agreement “coupled with a more stable supply should reduce historical cycle volatility and drive more predictable growth,” Ackerman wrote, while raising its price target on Micron’s stock from $80 to $99 and a Maintained good ratings.
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Micron’s stock rose 1.0% in afternoon trading on Monday. While it is down about 14% from its 21-year high of $95.59 on April 12, 2021, it has gained 24% since it closed at a one-year low of $66.38 on October 13.
Ackerman also disagrees with what he said is another bearish argument on Micron shares — that memory could lag in 2022 if the semiconductor industry is “driven by inventory restocking.” He is more enthusiastic, writing that memory integrated circuits are becoming more important to data center, automotive applications, and networking system architecture. Growth in those categories has helped memory companies increase their share of demand in the semiconductor industry.
The FactSet consensus is still ahead of Ackerman’s new fiscal 2022 earnings estimate of $8.22 per share, but he said some buy-side expectations are for earnings as low as $6.75 to $7.00 per share, which he said. Considered “very pessimistic”. FactSet EPS consensus for fiscal year 2022 is $8.80. In Ackerman’s view, Micron’s stock has the potential to outperform the broader semiconductor industry during calendar 2022.
Ackerman joins Evercore ISI analyst CJ Muse, who tapped Micron as a semiconductor “top pick” a few weeks ago, playing into hot themes like “green shoots” in the memory sector, as well as build outs for Micron. indicates opportunities. metaverse
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Micron shares have gained 13.0% over the past month, while the PHLX Semiconductor Index SOX,
0.2% and the S&P 500 SPX has gained,
declined by 2.2%.