Micron and Western Digital Get Another Analyst-Induced Jolt

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The good news continues to roll for digital memory and storage makers, in particular Micron Technology (MU) - Get Report and Western Digital (WDC) - Get Report, which both received a boost from investors on Tuesday after Cowen upgraded both companies' shares.

Shares of Both Micron Technology and Western Digital gained after Cowen analyst Karl Ackerman raised his outlook on expectations that general demand for chips and memory devices will continue to recover in 2020, justifying higher valuations.

As of mid-morning, shares of Micron Technology were up 5.86% at $56.70, while shares of Western Digital were up 4.17% at $66.01.

Ackerman and other analysts have pointed to several positive market factors helping chip and storage makers recover from last year's dramatic declines, including the ongoing rollout of 5G as well as expectations of a ramp-up in the videogame-console upgrade cycle, both of which will drive demand, in particular for NAND chips.

Average selling prices for NAND chips “have bottomed and should exceed expectations in [the first half of 2020] on supply tightness from new product launches,” Ackerman said in a note to clients.

Micron in particular sells both NAND and DRAM memory chips. DRAM chips are generally more advanced and offer better profit margins than NAND. 

Ackerman also raised his one-year target price on shares of Micron to $70 from $50, and on Western Digital to $88 from $45.

Following its December earnings report, Micron said it expects second-quarter adjusted earnings of 29 cents to 41 cents a share on revenue of $4.5 billion to $4.8 billion. Analysts had been calling for profit of 39 cents a share on revenue of $4.75 billion.

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