TLDR
- Morgan Stanley upgraded Micron Technology to Overweight from Equalweight with a new $220 price target, up from $160
- DRAM prices are rising faster than expected, with potential for double-digit sequential increases in Q4 2024 and Q1 2025
- DDR5 spot prices have climbed 15% since Micron’s most recent guidance
- Industry sources suggest DRAM supply could remain tight for several quarters
- The upgrade comes after MU stock has already gained 124% year-to-date
Morgan Stanley analyst Joseph Moore upgraded Micron Technology to Overweight from Equalweight on Monday. He raised his price target to $220 from $160, suggesting 17% upside from current levels.
The upgrade reflects growing confidence in Micron’s pricing power and demand outlook. Moore ranks 306 out of more than 10,050 analysts tracked by TipRanks, with a 61% success rate and 16% average return per rating.
Micron stock has gained 124% this year, supported by improving memory chip prices and rising AI-related demand. The company is currently valued at $210.8 billion with revenue growth of 49% over the last twelve months.
Moore said momentum in Micron’s core DRAM business has continued to surprise. Prices are rising faster than expected, which is good news for the chipmaker’s bottom line.
Earlier concerns about high-bandwidth memory are easing as DRAM economics improve. His latest industry checks showed stronger market conditions across the board.
The analyst expects potential for double-digit sequential price increases in both Q4 2024 and Q1 2025. Feedback from chip buyers indicates tight DRAM supply could last for several quarters.
This supply constraint supports further upside for Micron’s stock price. Moore believes the company’s performance still has room to run even after recent gains.
DDR5 Prices Climbing Faster Than Forecast
DDR5 spot prices are already up 15% since Micron’s last guidance. This signals that Wall Street’s current forecasts may be too low.
Server memory prices for DDR5 are climbing sharply. Double-digit gains are expected this quarter and next, according to anecdotal evidence.
Moore believes these trends could push Micron’s earnings above current estimates. The analyst pointed to reports showing strong pricing momentum in server memory markets.
DRAM is a key type of computer memory used in servers and PCs. DDR5 is its newest, faster version built for advanced workloads like AI data centers.
Investor Sentiment Still Mixed
Moore noted that investor sentiment remains mixed, mainly because of ongoing worries about HBM costs. But as DRAM supply gets tighter and prices keep rising, he expects Micron’s core business to remain strong.
The analyst sees upward revisions continuing as the market recognizes the pricing strength. Sentiment hasn’t turned universally positive yet, which presents an opportunity for investors.
Micron stock has a consensus Strong Buy rating among 27 Wall Street analysts. That rating is based on 24 Buy and three Hold recommendations assigned in the last three months.
The average MU price target of $197.00 implies 4.88% upside from current levels. Morgan Stanley’s $220 target sits above the consensus.
The stock is currently trading near its 52-week high with a P/E ratio of 24.75. Technical indicators from InvestingPro suggest the stock is in overbought territory.
DDR5 spot pricing has climbed 15% since Micron’s most recent guidance, supporting the case for estimate revisions higher.
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