Global semiconductor shortages have skewed the delicate balance of supply and demand, placing even key market players under pressure from an already precarious position. Micron Technology Inc. (MU) is no exception, seeing its share price fall over 4% during Tuesday’s trading hours due to concerns over low memory chip prices and demand outlook. (See MU stock analysis on TipRanks)
Hans Mosesmann of Rosenblatt Securities published an analysis on the company, reiterating his optimism despite the unfavorable news. Mosesmann assigned a Buy rating, and delineated a price target of $165, reflecting a potential upside of 104.89%.
Mosesmann explained that although future DRAM prices (Dynamic Random-Access Memory chips) are in question, his firm’s “checks conclude prices are set for double-digit growth in Q3.” He expects even more significant growth in prices for Q4.
However, the analyst did concede that supply has not increased to meet growing demand for the last six months, and as a result the semiconductor shortage is sinking deeper.
Mosesmann mentioned that the DRAM chips are pivotal for data centers, 5G broadband, automotive uses, and wireless technologies. Without memory growth in the semiconductors, these industries can not scale.
In regard to risks toward Micron’s revenues, Mosesmann listed factors such as the semiconductor industry's sensitivity toward macroeconomic factors and global downturns, low demand or too much supply, as well as the fact that the company exists in a competitive market and simply cannot afford to underperform.
On TipRanks, Micron has an analyst rating consensus of Strong Buy, based on 19 Buy and 3 Hold ratings. The average analyst MU price target is $115.89, indicating a potential 12-month upside of 43.91%.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.