KeyBanc increased its price target for Micron Technology (MU - Get Report) to $58 from $45 citing "increasing signs of stabilization" in the semiconductor sector, and analyst Weston Twigg reiterated his overweight rating on shares of the Boise, Idaho-based company.
"Barring a recession, we expect memory trends to improve through 2020," Twigg wrote in a note. "MU is well-positioned to benefit from long-term drivers related to compute and storage, and we view DRAM, which accounts for roughly 70% of MU's revenue, as a likely healthier market than NAND over the long-run due to fewer competitors, high barriers to entry, and supply constraints related to scaling limitations."
Twigg also said his updated memory supply model "suggests that supply remains well managed as memory producers wait for a demand recovery."
He also sees signs of tightening supply in some markets "as demand elasticity for NAND kicks in, and as NAND and DRAM content loading in phones, PCs, and other devices continues to grow."
Twigg also said he expects both NAND and DRAM inventories to decline in the second half of this year, "with NAND pricing likely to steadily increase through 2H and DRAM pricing likely to stabilize by the end of the year."
Micron stock was up nearly 2% earlier in Tuesday's session but has since pulled back. It was trading up 0.12% to $49.19 at last check.
Micron shares hit a 52-week high of $50 on Monday. The stock has gained 9% over the past year.