Buy Micron Because Memory-Chip Prices Will Rebound, Analyst Says

Eric J. Savitz Sector Focus Technology MU WDC Micron Technology Western Digital Computers/Consumer Electronics Computer Storage Devices Semiconductors Computing Computer Peripherals Computer Hardware Industrial Electronics Industrial Goods Technology Mehdi Hosseini Hosseini NAND Analysts' Comments/Recommendations Corporate Funding Corporate/Industrial News Content Types Factiva Filters C&E Exclusion Filter C&E Industry News Filter I/CPR I/XFFX M/IDU M/TEC MU N/ANL N/ARG N/CNW N/DJN N/WER WDC Barrons.com Barrons Blogs Wires Fortune 500 DJIA Dow Jones Industrial Average CODES_REVIEWED Companies Technology Markets Sector Focus author Eric J. Savitz author|Eric J. Savitz topicid 8582 name Eric J. Savitz extractedtext Eric J. Savitz rank 1 codetype author code eric_j_savitz nameformat surname_first author Eric J. Savitz id Eric J. Savitz barrons_display_brand BARSECFOCUS barrons_display_brand|BARSECFOCUS codetype BARRONS_DISPLAY_BRAND name Sector Focus source MANUAL code BARSECFOCUS value BARSECFOCUS canbedisplaybrand true status modified barrons_display_subject BARINDTECH barrons_display_subject|BARINDTECH canbedisplaysubject true codetype BARRONS_DISPLAY_SUBJECT name Technology source MANUAL code BARINDTECH value BARINDTECH status modified co MICT co|MICT symbol MU country US codetype co displayname Micron Technology extractedtext Micron Technology source MANUAL code mu name Micron Technology significance prominent onlinesignificance prominent exchange U.S.: Nasdaq exchangeisocode XNAS chartingsymbol STOCK/US/XNAS/MU fcode MICT status modified co WSTDGT co|WSTDGT symbol WDC country US codetype co displayname Western Digital extractedtext Western Digital source MANUAL code wdc name Western Digital significance prominent onlinesignificance prominent exchange U.S.: Nasdaq exchangeisocode XNAS chartingsymbol STOCK/US/XNAS/WDC fcode WSTDGT status modified company MU company|MU name Micron Technology significance PROMINENT company WDC company|WDC name Western Digital significance PROMINENT djn MU djn|MU codetype djn why about source FACTIVA occurs true code mu name MU significance prominent onlinesignificance prominent fcode MU djn WDC djn|WDC codetype djn why about source FACTIVA occurs true code wdc name WDC significance prominent onlinesignificance prominent fcode WDC djn M/IDU djn|M/IDU codetype djn name M/IDU why lineage source FACTIVA code m_idu fcode M/IDU djn M/TEC djn|M/TEC codetype djn name M/TEC why lineage source FACTIVA code m_tec fcode M/TEC djn I/CPR djn|I/CPR codetype djn name I/CPR why lineage source FACTIVA code i_cpr fcode I/CPR djn N/ANL djn|N/ANL codetype djn why about source FACTIVA code n_anl name N/ANL significance prominent onlinesignificance prominent fcode N/ANL djn N/ARG djn|N/ARG codetype djn why about source FACTIVA code n_arg name N/ARG significance prominent onlinesignificance prominent fcode N/ARG djn N/CNW djn|N/CNW codetype djn name N/CNW why lineage source FACTIVA code n_cnw fcode N/CNW djn I/XFFX djn|I/XFFX codetype djn why about source FACTIVA code i_xffx name I/XFFX significance prominent onlinesignificance prominent fcode I/XFFX djn N/DJN djn|N/DJN codetype djn name N/DJN source DJN-CONTROL code n_djn value N/DJN status modified inactivebydefault true djn N/WER djn|N/WER codetype djn name N/WER source DJN-CONTROL code n_wer value N/WER status modified inactivebydefault true editorial-seo-id micron-stock-memory-chip-pricing-dram-nand-earning-51576512655 editorial-seo-id|micron-stock-memory-chip-pricing-dram-nand-earning-51576512655 first_publish_headline Buy Micron Stock Because Memory-Chip Pricing Is Set to Recover, Analyst Says first_publish_headline|Buy Micron Stock Because Memory-Chip Pricing Is Set to Recover, Analyst Says flow NWREGULAR flow|NWREGULAR codetype FLOW name Wires source MANUAL value NWREGULAR code NWREGULAR status modified flow Barrons.com flow|Barrons.com codetype FLOW name Barrons.com source MANUAL value Barrons.com code online status modified name Online title Product code Barrons.com flow Barrons Blogs flow|Barrons Blogs codetype FLOW source MANUAL title Product code Barrons_Blogs name Barrons Blogs value Barrons Blogs status modified headline Buy Micron Stock Because Memory-Chip Pricing Is Set to Recover, Analyst Says headline|Buy Micron Stock Because Memory-Chip Pricing Is Set to Recover, Analyst Says idx xf500 idx|xf500 codetype idx why about source FACTIVA code xf500 name Fortune 500 significance prominent onlinesignificance prominent fcode xf500 in i34531 in|i34531 codetype in why about source FACTIVA code i34531 name Semiconductors significance prominent onlinesignificance prominent fcode i34531 in iindele in|iindele codetype in name Industrial Electronics why lineage source FACTIVA code iindele fcode iindele in iindstrls in|iindstrls codetype in name Industrial Goods why lineage source FACTIVA code iindstrls fcode iindstrls in itech in|itech codetype in name Technology why lineage source FACTIVA code itech fcode itech in i3302 in|i3302 codetype in name Computers/Consumer Electronics why lineage source FACTIVA code i3302 fcode i3302 in i3302019 in|i3302019 codetype in name Computer Storage Devices why association source FACTIVA code i3302019 fcode i3302019 in icomp in|icomp codetype in name Computing why lineage source FACTIVA code icomp fcode icomp in icper in|icper codetype in name Computer Peripherals why lineage source FACTIVA code icper fcode icper in icph in|icph codetype in name Computer Hardware why lineage source FACTIVA code icph fcode icph index Dow Jones Industrial Average index|Dow Jones Industrial Average symbol DJIA country US codetype index displayname Dow Jones Industrial Average extractedtext Dow Jones Industrial Average source MANUAL code djia name Dow Jones Industrial Average significance prominent onlinesignificance passing-mention exchange Dow Jones Global exchangeisocode DOW JONES GLOBAL chartingsymbol INDEX/US/DOW JONES GLOBAL/DJIA status modified inset inset-1 inset|inset-1 responsive layout wrap media media-2 media|media-2 responsive layout wrap softcrop Horizontal imphotoid im-136817 location https://images.barrons.com/im-136817/?size=1.5 media media-1 media|media-1 softcrop Horizontal imphotoid im-136817 location https://images.barrons.com/im-136817/?size=1.5 ns c17 ns|c17 codetype ns why about source FACTIVA code c17 name Corporate Funding significance prominent onlinesignificance prominent fcode c17 ns c1521 ns|c1521 codetype ns why about source FACTIVA code c1521 name Analysts' Comments/Recommendations significance prominent onlinesignificance prominent fcode c1521 ns ccat ns|ccat codetype ns name Corporate/Industrial News why lineage source FACTIVA code ccat fcode ccat ns ncat ns|ncat codetype ns why lineage source FACTIVA code ncat name Content Types internalsymbol true fcode ncat ns nfact ns|nfact codetype ns why lineage source FACTIVA code nfact name Factiva Filters internalsymbol true fcode nfact ns nfce ns|nfce codetype ns why lineage source FACTIVA code nfce name C&E Exclusion Filter internalsymbol true fcode nfce ns nfcpin ns|nfcpin codetype ns why lineage source FACTIVA code nfcpin name C&E Industry News Filter internalsymbol true fcode nfcpin nwchain SB524475986316793338304045860821313579775021 nwchain|SB524475986316793338304045860821313579775021 pe 167638358 pe|167638358 lastname Hosseini codetype pe displayname Hosseini, Mehdi confidence 94 why occur extractedtext Mehdi Hosseini source FACTIVA code 167638358 relevance 75 name Mehdi Hosseini significance passing firstname Mehdi onlinesignificance passing-mention nameformat surname_first confidencerange high relevancerange medium fcode 167638358 pe Hosseini pe|Hosseini lastname Hosseini codetype pe displayname Hosseini extractedtext Hosseini source FACTIVA code hosseini name Hosseini nameformat surname_first pe NAND pe|NAND codetype pe displayname NAND extractedtext NAND source FACTIVA code nand name NAND firstname NAND nameformat surname_first relay SYND relay|SYND codetype RELAY name Syndication source EXPANDER value SYND code synd status modified statistic CODES_REVIEWED statistic|CODES_REVIEWED name CODES_REVIEWED value CODES_REVIEWED codetype STATISTIC code CODES_REVIEWED subject BARMKTS subject|BARMKTS codetype SUBJECT selectable true title Markets code BARMKTS name Markets canbedisplaysubject true ruleid BARMKTS value BARMKTS status modified subject BARCOMP subject|BARCOMP codetype SUBJECT title Companies code BARCOMP name Companies canbedisplaysubject true ruleid BARCOMP value BARCOMP status modified subject BARINDTECH subject|BARINDTECH codetype SUBJECT title Technology code BARINDTECH name Technology canbedisplaysubject true ruleid BARINDTECH value BARINDTECH status modified subject BARSECFOCUS subject|BARSECFOCUS codetype SUBJECT title Sector Focus code BARSECFOCUS name Sector Focus ruleid BARSECFOCUS value BARSECFOCUS canbedisplaybrand true status modified wordcount 618 wordcount|618 id facebook id|facebook news_tab_url https://www.barrons.com/articles/micron-stock-memory-chip-pricing-dram-nand-earning-51576512655 Photograph by Tomohiro Ohsumi/Bloomberg Buy Micron Stock Because Memory-Chip Pricing Is Set to Recover, Analyst Says Buy Micron Stock Because Memory-Chip Pricing Is Set to Recover, Analyst Says Buy Micron Stock Because Memory-Chip Pricing Is Set to Recover, Analyst Says

Susquehanna Financial Group analyst Mehdi Hosseini lifted his rating to Positive from Neutral and raised his price target on the stock to $85 from $45,

Buy Micron Because Memory-Chip Prices Will Rebound, Analyst Says

Susquehanna Financial Group analyst Mehdi Hosseini anticipates a strong recovery in the supply-and-demand balance for memory chips in 2020 and 2021.

https://asset.barrons.com/dj-mg/dice/barrons-staffpicks-2d590600-c862-4394-b9d3-66b48c376d60/inset.json mailto:eric.savitz@barrons.com Buy Micron Stock Because Memory-Chip Pricing Is Set to Recover, Analyst Says By Eric J. Savitz Photograph by Tomohiro Ohsumi/Bloomberg Micron will report results for its fiscal first quarter ended in November on Wednesday after the close of trading.

Micron Technology shares were trading higher Monday morning after Susquehanna Financial Group analyst Mehdi Hosseini lifted his rating to Positive from Neutral and raised his price target on the stock to $85 from $45, anticipating a strong recovery in the supply-and-demand balance for memory chips in 2020 and 2021.

On a similar basis, he also raised his rating on Western Digital (ticker: WDC) to Positive from Neutral, lifting his target to $90, from $55.

For Micron’s (MU) 2020 fiscal year ending in August, Hosseini actually trimmed his earnings-per-share forecast to reflect near-term pricing trends, and sits well below his analyst peers. But he thinks a turn will start with the quarter ending in May and will continue from there, leading him to be well above consensus for fiscal year 2021.

He cut his fiscal year 2020 EPS forecast to $1.95 from $2.07, but raised his 2021 forecast to $6.56 from $5.97. And he said Micron has “earnings power” in the $8 to $10 a share range. Street consensus estimates call for profit of $2.44 a share this year and $5.29 next year.

https://asset.barrons.com/dj-mg/dice/barrons-staffpicks-2d590600-c862-4394-b9d3-66b48c376d60/inset.json

Micron will report results for its fiscal first quarter ended in November on Wednesday after the close of trading. Hosseini thinks profit will be in line with the company’s guidance at around 35 cents a share. But he said he sees improving fundamentals ahead, with EPS likely to hit bottom in the current quarter.

Hosseini thinks the company will benefit in coming quarters from improving economics for both DRAM and NAND memory chips. DRAM is used in personal computers, workstations and servers. NAND chips are used in smartphones and solid-state drives.

For DRAM, he thinks average selling prices will be down in the low teens quarter over quarter for the first quarter, with a mid-single-digit decline in the current quarter ending in February, and then show a 3% to 5% quarter-over-quarter increase from there. He sees the company’s gross margin in DRAM troughing in the low 30% range in the February quarter before rebounding to the high 40s by the end of fiscal year 2020 and into the 50s in 2021. “We expect DRAM bit demand growth in 2020 to reach 20%-plus, driven by smartphone bit demand growth of 25%-30%, and exceeding supply bit growth of midteens,” he wrote in a separate note on the outlook for chip demand.

For NAND, he expects a low single-digit slide in pricing in the fiscal first quarter, with a similar decline in the current quarter. He sees NAND gross margins troughing in the current quarter, with gradual improvement into the 20s in fiscal year 2020. Investors will need to wait for 2021 to see a meaningful recovery in the 30s or 40s, he wrote. The analyst expects NAND bit demand growth in 2020 to reach 30% to 35%, exceeding supply growth of 25% to 30%.

Micron stock was up 4.6% to $53.57 Monday morning. The Dow Jones Industrial Average was up 0.8%.

Write to Eric J. Savitz at eric.savitz@barrons.com

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.