Analysts sees possible 'green shoots' for Micron (MU)

Lynx Equity Strategies analysts KC Rajkumar and Jahanara Nissar see some green shoots in the offing for Micron Technology (NASDAQ: MU).

"For the first time this year we are seeing the semblance of demand in the DRAM market," the analaysts commented. "After staying moribund all year, in last week of Nov we saw a tiny bit of interest in the DRAM secondary market from buyers out of Hong Kong."

"After a sharp drop in PC/server module pricing in Oct, prices in the primary and secondary markets seems to be stabilizing in Nov, in other words the 2nd derivative turned positive, as we had previewed ahead of MU’s Aug earnings call," it was added. "The intense selling pressure at distis seems to have abated somewhat during Nov. HK players seem to have taken their losses for the year and may be willing to nibble at new inventory. We are seeing signs of a few US-based distis too taking on inventory for the first time this year."

The firm is making a contrary call to the Street’s dour view. They are raising their 6-month price target on Micron from $56 to $60 based on a trough multiple of 30x over our updated CY23 earnings estimate of $20bn/$1.87.

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