Micron (MU) shareholders have had a bumpy 2019. One analyst, however, thinks the current stock price could offer new investors an opportunity to get into MU on the cheap.
This morning, Needham analyst Rajvindra Gill upgraded the stock from Hold to Buy and assigned this $37 stock a $50 target price. We did the math for you, and that's an upside of nearly 35%.
Micron’s May quarter was better than feared with sales of $4.79 billion above consensus estimates of $4.74 billion. Non-GAAP EPS was $1.05 exceeding consensus expectations of $0.82 driven by a tax benefit. Full year sales are now expected to be around $4.5 billion, compared to analysts expectations of $4.56 billion.
Gill commented, "We are upgrading Micron to a Buy from a Hold after remaining cautious on the name since the beginning of the year. August EPS guidance of $0.45 (at mid-point) was better than feared as some investors believed the company would lose money. The company has seen normalizing inventory levels in the cloud, graphics, and PC end markets, as customers digest excess inventory. Another significant tailwind is MU's resumption of shipments of certain products to Huawei in the last 2 weeks. With an improved DRAM outlook for C2H19, significant CAPEX cuts coming in FY20, and a stabilizing book value per share of $31.89 (trading at trough P/B multiple of ~1x), we believe there's limited downside risk over the next 6-12 months."
Micron stock rallied on Wednesday, surging by nearly 14% as investors reacted to the company's better-than-expected numbers.
All in all, Wall Street’s confidence backing this chip giant is strong, with TipRanks analytics showcasing MU stock as a Buy. Based on 22 analysts polled in the last 3 months, 13 are bullish, 5 are neutral and 4 are bearish. The 12-month average price target stands at $42.90, marking a nearly 15% upside from where the stock is currently trading. (See MU's price targets and analyst ratings on TipRanks)