This analyst calls Micron the best idea for 2022; sees more than 70% increase for the stock
Micron (UM) delivered the goods in the November quarter and the market was duly impressed. Stocks got a boost after the memory giant’s quarterly results and outlook beat expectations.
At F1Q22, the company generated revenue of $ 7.69 billion, an increase of 33% from the same period a year ago and $ 10 million before Street’s call. Non-GAAP EPS of $ 2.16 also beat consensus estimates – by $ 0.05.
The report was successful in allaying concerns about weak demand due to manufacturers’ inventory stocking in the PC market, putting pressure on DRAM prices. Additionally, there were concerns that a lack of memory-less products due to supply chain bottlenecks would create less need for Micron’s offerings.
The quarterly posting was successful in allaying those fears, and the good news is that the way forward also appears to be clear.
In the second quarter, the company expects revenue to reach $ 7.5 billion and non-GAAP EPS of $ 1.95. That surprised analysts, who expected cumulative revenue of $ 7.27 billion and non-GAAP EPS of $ 1.86.
Scanning the print, Micron’s biggest supporter on Wall Street was not disappointed.
“Strong results for the November quarter, better than the consensus outlook for the February quarter and a reduction in shortages through CY2022 is a perfect setup for stocks to recover from the PC DRAM ASP collapse,” said Hans Mosesmann, Analyst at Rosenblatt “Indeed, non-memory component shortages are now behind the business and the overall shortage mitigation is becoming a tailwind for the business for the next two years, in our view.”
The semiconductor industry is known for its cyclical nature, and the 5-star analyst calls the current cycle “the mother of all cycles.” Micron is well positioned to take advantage of age-old trends such as AI, cloud data centers, electric cars, and even has the metaverse in its sights. All are expected to create demand for the company’s memory and storage products.
As such, Mosesmann calls Micron a better idea for 2022 and reiterates a buy rating for the stocks, supported by a price target of $ 165. The implication for investors? Up 74%. (To look at Mosesmann’s record, Click here)
Most of the street agrees with the Rosneblatt analyst’s point of view; Based on 19 buys, 4 holds and 1 sell, the stock has a strong buy consensus rating. Based on The Street’s average price target of $ 107.83, the shares have room for 19% growth in the coming year. (See the analysis of Micron shares)
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