The Micron AnalystMatt Bryson upgraded Micron shares from Neutral to Outperform and increased the price target from $100 to $120.
The Micron TakeawaysWedbush's optimism on Micron is predicated on upgraded NAND expectations, faster semiconductor content growth forecast, increased confidence in DRAM industry stability and multiple expansion opportunity, Bryson said in a note.
Wedbush's NAND pricing estimates are being lifted by $1 for 2023 to account for increased optimism as well as likely benefits stemming from the disruptions at Japan fabs of Kioxia and Western Digital Corporation, the analyst said.
Secondly, faster growth in semiconductor content should also translate to greater memory requirements over the next few year and stronger sales for memory players including Micron, he said.
Wedbush is now increasingly confident of longer-term DRAM industry stability, Bryson said.
Way back in 2019, Chinese efforts to support domestic production as well as Intel Corporation's work on 3D XPoint loomed as potential threats to the better economics created by the consolidation of the DRAM market, the analyst said.
Now, the likelihood of 3D XPoint gaining traction looks limited, he said.
Additionally, the restrictions around EUV imports into China appear to create a significant issue for the future roadmaps of Chinese producers, Bryson said.
Micron has long contended with lower multiples, the analyst said, adding that the multiple expansion being enjoyed by semis should translate in part to commodity suppliers such as Micron, particularly given the strong growth trends in semis.
Micron's recent share buybacks and initiation of a dividend put the company on a path of multiple expansion, in Wedbush's view.