TLDR
- Morgan Stanley upgraded Micron to Overweight with $220 price target, up from $160
- DRAM prices rising faster than expected with double-digit increases forecast for Q4 and Q1
- DDR5 spot prices jumped 15% since last guidance
- Tight supply conditions expected to last several quarters
- MU stock up 124% year-to-date on memory chip demand
Morgan Stanley upgraded Micron Technology to Overweight from Equalweight on Monday. Analyst Joseph Moore raised his price target to $220 from $160.
The upgrade comes as DRAM pricing momentum continues to exceed Wall Street expectations. Moore sees 17% upside potential from current levels.
Micron has gained 124% this year on improving memory chip prices and AI-related demand. The company’s market value now stands at $210.8 billion.
Moore’s industry checks reveal stronger market conditions than anticipated. He expects double-digit sequential price increases in Q4 2024 and Q1 2025.
The analyst ranks 306 out of more than 10,050 tracked by TipRanks. His track record shows a 61% success rate with 16% average returns.
Core DRAM Business Showing Strength
Momentum in Micron’s core DRAM business has surprised to the upside. Prices are climbing faster than forecasters expected just weeks ago.
Concerns about high-bandwidth memory are fading as DRAM economics improve. Feedback from chip buyers points to tight supply lasting several quarters.
This supply constraint provides a tailwind for Micron’s pricing power. Moore believes the stock has room to run despite recent gains.
DDR5 spot prices have climbed 15% since Micron’s most recent guidance. This suggests current Wall Street estimates may be too conservative.
Server memory prices for DDR5 are rising sharply. Anecdotal evidence points to double-digit gains in both the current and next quarter.
These trends could drive Micron’s earnings above consensus estimates. The pricing environment appears stronger than most analysts anticipated.
Memory Chip Market Dynamics
DRAM serves as essential computer memory for servers and PCs. DDR5 represents the newest generation designed for AI data centers and advanced computing.
Industry contacts increasingly believe DRAM markets may stay tight for multiple quarters ahead. This creates a favorable pricing backdrop for Micron.
Moore noted that investor sentiment remains mixed due to HBM cost concerns. However, as supply tightens and prices rise, he expects the core business to shine.
The analyst sees continued upward estimate revisions as the market recognizes pricing strength. Sentiment hasn’t fully turned positive yet, creating opportunity.
Wall Street Consensus
Micron stock carries a Strong Buy rating from 27 analysts. The consensus includes 24 Buy ratings and three Hold recommendations.
The average price target sits at $197.00, implying 4.88% upside. Morgan Stanley’s $220 target exceeds the Street consensus by a healthy margin.
The stock trades near its 52-week high with a P/E ratio of 24.75. Some technical indicators suggest overbought conditions in the near term.
Revenue grew 49% over the past twelve months according to recent data. DDR5 spot pricing remains 15% above levels from Micron’s last guidance update.
