Mizuho analyst Vijay Rakesh raises price target on Micron Technology to $20
Vijay Rakesh, an analyst at Mizuho Securities, released a research note today, wherein he raised his 12-month price target on Micron Technology, Inc (NASDAQ:MU) stock to $20 from $15. The analyst also reaffirmed his Outperformed rating on the stock.
Furthermore, the analyst mentioned in his research note that he projects that a stable to improving DRAM spot coupled with contract pricing would prove to be an upside for the chip maker’s gross margins. Micron recently faced disruptions in the production of DRAM, and the analyst believes that this should bring about a favorable impact on pricing, creating a tailwind into peak build. Historical trends show that the tech company’s stock price tracks gross margin and an inflection point occurring in the margins during second half of 2016 could prove to be a plus point for Micron stock.
The analyst also predicts a top-line tailwind fueled by the NAND bit growth during 2HFY16, primarily stimulated by 3D-NAND. Mr. Rakesh also highlights that the company will pay attention to a positive Free Cash Flow (FCF) during the fiscal year 2017.
On Friday, Needham & Company analyst Rajvindra Gill also covered the stock in his research report; the analyst reaffirmed his Underperform rating on the stock. The same day, the stock jumped about 2% during the intra-day trade, following a report regarding a minor mistake in DRAM production which forced the Korean vendor to scrap around 30,000 to 50,000 wafers from the 21nm node.
However, Mr. Gill refuted these claims, backing his thesis with a conversation with the supply chain contacts and mentioned that these claims are unsubstantiated. Needham analyst also highlighted that although the DRAM pricing environment has improved, which was mainly because of a better PC DRAM pricing situation, the company still has an excessive inventory pile-up.
Micron stock currently trades at $16.17, down about 0.49% as of 11:37 AM EDT. The stock has outperformed the S&P 500 Index since the start of this year through August 19, as it spiked about 15% in comparison to the index’s gain of 7% during the same time span.