Micron dips despite Wedbush upgrade, firm sees 33% upside from current levels
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Micron Technology (NASDAQ:MU) shares dipped in Monday trading, despite the fact Wedbush Securities upgraded the semiconductor company and raised its price target to $120, implying significant upside from current levels.
Analyst Matthew Bryson raised his rating to outperform from neutral and price target, noting that the assumptions for NAND pricing used have become conservative, given the recent disruptions at Western Digital's plants in Japan.
"And while we see general industry fundamentals as more important to near term results vs. specific company capabilities, we would note that Micron's improved execution around NAND seemingly positions the company to take advantage of any opportunities tied to Kioxia's and WD's struggles," Bryson wrote in a note to clients.
Micron shares fell nearly 1% to $89.06 in mid-day trading.
In addition, Micron has opportunities to grow its content in devices, which Bryson believes is extremely important for the company.
"Faster growth in semiconductor content should also translate to greater memory requirements over the next few years (and stronger sales for memory players including MU)," the analyst explained.
There's also the possibility that Micron could see an expansion of its earnings multiple as investors continue to appreciate the company's growth prospects.
"While we do believe there should be some delta between these names and fabless design companies, we also think that the multiple expansion enjoyed by semis should translate in part to commodity suppliers, particularly given the strong growth trends in semis that we believe are fueling those multiples should also accrue to memory," Bryson wrote.
Last month, Micron said that David Zinsner stepped down from his position as Chief Financial Officer to take the same job at Intel (NASDAQ:INTC).