Shares of Micron (MU - Free Report) gained more than 6.5% in early morning trading Monday after one key analyst took the most-bullish stance on the stock among their Wall Street peers.
Nomura Instinet raised its 12-month price target for the memory chip maker to $100 from $55. That call represents about an 83% upside to MU’s latest close and marks the highest price target out of the 26 research firms that cover the company, according to FactSet.
“We see DRAM pricing resuming an upward trend in Q2, a first-time dividend and share buyback announcement in May, continued margin expansion in NAND and increased M&A discussion as important catalysts,” wrote Nomura’s Romit Shah in a note to clients Monday.
Shah mentioned that memory prices have only slumped about 3% year to date, which compares favorably to the 10% to 20% seasonal decline that the market has seen over the past three years. He also predicted that prices will increase by about 10% over the next six months.
“Our research indicates that suppliers will begin raising prices in Q2 and Q3,” Shah added. “This outlook sharply contrasts with Street expectations of a 5-6% sequential decline in each of the following 4 quarters (May-Feb 19).”
Micron has emerged as one of Wall Street’s hottest stocks over the past two years. In what has been a rocky start to 2018 for many trendy tech companies, the semiconductor maker has already added another 33% climb to its monumental surge.
The company has achieved these strong gains on the back of rapid earnings and revenue improvements—an expansion trend that is expected to continue in the near term. In fact, our latest Zacks Consensus Estimates are calling for EPS growth of 113% and revenue growth of 41% in the current fiscal year.
And Nomura’s bullish sentiment is part of a broader trend of analysts becoming more optimistic about the stock. Within the past 60 days, we have seen eight revisions, with 100% agreement to the upside, for Micron’s full-year earnings estimates. The Zacks Consensus Estimate has moved 74 cents higher over that timeframe.
Micron is currently sporting a Zacks Rank #2 (Buy), as well as an “A” grade in each of the Value, Growth, and Momentum categories of our Style Scores system.
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