This Analyst Believes Negative Sentiment, Macro Headwinds as an Opportunity to Step in for Micron Technology and Western Digital

By Benzinga
Benzinga
Benzinga
June 23, 2022 Updated: June 23, 2022

Mizuho analyst Vijay Rakesh slashed price targets on Micron Technology, Inc. to $95, from $113 (66 percent upside), and Western Digital Corp. to $68, from $72 (44 percent upside), and reiterated a Buy.

He observed that memory industry update, sentiment, and pricing trends had softened considerably in the last month with weaker PC-handset trends, consumer demand concerns with DRAM softer but NAND worse with weak demand offset by better supply from Kioxia.

He wrote that server is the only bright spot in driving memory demand, and NAND and DRAM pricing trend in the 2H negative with inventory pressure and consumer demand pause.

He sees MU positioned for upside into 1H22 with stronger than expected trends in key markets, including PCs, Handsets, and Server.

While pricing could see further declines, he saw it likely more modest than typical pricing troughs as industry supply should remain disciplined throughout 2022.

WDC has executed well overall. However, he saw NAND trending softer into 2H22 as demand paused for PCs/Handsets and remained healthy for Servers.

He believed WDC’s NAND business could see a catch-up trade. With solid execution from MU and WDC, long-term secular trends in 5G, and persistent Server strength, he believed negative sentiment and macro headwinds provide an opportunity to step in.

By Anusuya Lahiri

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