UBS Says Buy Micron Technology (MU) Ahead of Earnings, DRAM Strength is Sustainable
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UBS analyst Timothy Arcuri reiterated a Buy rating and $120.00 price target on Micron Technology (NASDAQ: MU) ahead of MU reporting FQ3:21 (May) at the end of this month. The analyst's regular monthly industry work has been positive resulting in increased bit and pricing assumptions for both DRAM and NAND.
The analyst stated "FQ2 (May) DRAM bits were a little stronger (+3% v +1%) with ASP unchanged at +16%, while realized NAND pricing has been a bit better than our model (+5% v +2%). The net effect in DRAM is that MU likely exits FQ2 with below target inventory levels which will pressure bit growth and keep supply in check through YE (similar to the situation at Samsung/Hynix). Investors have become concerned amid some mixed data points, but this is normal course of business as customers built inventory ahead of big CQ2 price increases and are now in more "wait and see" mode on 2H demand indications - a picture further complicated this cycle by constraints of other chip components. Net though, our indications remain steady across all key segments especially cloud, even as mobile is more just in-line due to tepid demand and some inventory workdown from China OEMs (PC is now only ~13% of bits w/NB the vast majority). For MU, we still see DRAM ASP up nearly 10% for both FQ4 (Aug) and FQ1 (Nov) while under-supply should persist in 2022".
Shares of Micron Technology closed at $78.66 yesterday.
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