Western Digital (WDC) - Get Report, Seagate (STX) - Get Report and Micron (MU) - Get Report all were upgraded by a Baird analyst, who said pricing for DRAM/NAND flash memory remains positive despite weaker demand in China.
Analyst Tristan Gerra double-upgraded Western Digital to outperform from underperform. He lifted Seagate to outperform from neutral. And he now pegs Micron neutral, up from underperform.
Gerra boosted his price target on Western Digital to $75 from $60 and Seagate to $60 from $54. He now target targets Micron at $55 a share, up from $45.
Western Digital was up nearly 1% to $56 in premarket trading, while Micron was off slightly to $52.49, and was even at $47.95.
In a note to investors, Gerra said the positive pricing outlook for DRAM/NAND flash memory is unchanged despite current demand weakness in China. That's because the "supply chain is holding onto inventories in the face of supply disruptions and PCB DRAM module shortages."
Gerra also said "pricing will remain very resilient in 2020" and "[server] demand remains strong."
For Western Digital and Micron the Baird analyst is "modeling sequential price increases" for NAND throughout the year and for DRAM in each quarter starting in calendar Q2.
The upgrade for Seagate is driven by expected market-share gains and by wider gross margins in the calendar second half, he said.
The spread of the deadly coronavirus, which originated in China, has sparked concerns about factories in China and the vulnerability of the global supply chain.
Last week, National Retail Federation CEO Matthew Shay told CNBC that some of the coronavirus-driven supply-chain disruption in China is subsiding.
On Monday, however, the South China Morning Post said several analysts are warning that China, Japan and South Korea are at risk of a second wave of disruptions to their supply chains due to the coronavirus epidemic.
The three countries contribute about 24% to the world economy with a combined yearly trading volume of over $720 billion, the South China Morning Post said.