Micron Technology Stock Offers Attractive Buying Opportunity

Leading semiconductor company, Micron Technology (ticker: MU), presents a compelling opportunity for investors as the industry shows signs of recovery, according to Citi Research. Analyst Christopher Danely has reiterated his “Top Pick” Buy rating for Micron, along with a price target of $85, indicating a potential upside of about 22%.

Analyzing the Market

Danely recently met with clients and discovered some skepticism surrounding the Buy rating for Micron. However, he believes that the valuation of the company does not fully factor in the upturn in dynamic random-access memory (DRAM) – a type of memory commonly used in computers, smartphones, and servers.

Positive Outlook for Memory Pricing

Danely highlights that major chip makers have reduced production, leading to a recovery in memory pricing. He predicts a 10% quarter-over-quarter increase in memory-chip prices in the fourth quarter of this year, followed by a 32% year-over-year rally in 2024.

Anticipated Stock Price Rally

As Micron’s earnings improve along with the favorable market trends, Danely expects a significant rally in the company’s stock price. Factors such as decreasing inventory, increasing utilization rates, and rising DRAM prices are projected to drive Micron back to solid profitability in the coming quarters.

Steady Growth for Micron

Micron stock has demonstrated strong performance this year, recording a 40% increase. This growth aligns closely with the 39% rise of the iShares Semiconductor exchange-traded fund (SOXX), which tracks the performance of the ICE Semiconductor Index – an index that includes Micron stock.

In conclusion, Micron Technology holds substantial potential for investors in the current semiconductor market. With expected improvements in memory pricing and the company’s own earnings trajectory, the stock is positioned for further growth.