Micron Upgraded by Morgan Stanley as Memory Prices Increase

Morgan Stanley analysts get more positive in the short term on the memory chip maker.
By Jacob Sonenshine ,

Shares of Micron (MU) - Get Report were upgraded to equal weight from underweight by Morgan Stanley as analysts there see short-term prices rising in the face of possible supply risks.

"We believe that the DRAM market remains fundamentally oversupplied, and we remain negative longer term," analyst Joseph Moore wrote in a note on Tuesday. "However, global trade tensions and potentially supply risks are driving shorter term inventory accumulation, which makes our previous underweight rating less actionable." Moore moved up his price target significantly from $31 to $48, slightly above the stock's current level. 

DRAM prices are rising as smaller customers are accumulating inventory, according to Moore. "We have seen spot prices rally over 20% in the last three weeks," Moore said. He still thinks the DRAM market will remain oversupplied, on net, for the next year or so, however. Over the longer term, Moore sees PC prices dropping 15% to 20%. 

Moore thinks Micron can trade at 12 times forward earnings per share of $4, leading to his price target of $48. 

Shares were roughly flat at $46.87 in early trading on Tuesday. Micron shares are up 43% year-to-date after posting a strong earnings report in June. 

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