Shares of Micron Technology (NASDAQ: MU) rose as much as 12.1% higher on Monday, peaking just after 1 p.m. EDT. At the end of the day, Micron's stock closed 8.8% above Friday's final listing price. Two analyst firms raised their price targets on the memory chip veteran's stock, supported by some remarkably bullish commentary.
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Evercore ISI analyst C.J. Muse boosted Micron's target price from $60 to $80 per share, citing a fundamentally different memory market that "absolutely" isn't destined to fight another round of pricing wars.
At Nomura/Instinet, veteran chip analyst Romit Shah moved Micron's price target from $55 to a cool $100 per share. The stock is in the "early stages of another major breakout," in Shah's view. If nothing else, he argues that Micron's shares should gather larger price-to-earnings multiples as investors start to embrace the new industry conditions. As a reminder, Micron is trading at a bargain-basement P/E ratio of 9.3 times trailing earnings today.
Both analysts already held "buy" ratings on Micron's stock. No change there.
The bullish firms agree that Micron should be able to protect and even widen its profit margins in both the NAND and DRAM chip sectors, even as shipping volumes are set to increase sharply in the near future. Manufacturing costs are shrinking, Micron's product mix is getting richer due to strong demand for high-end mobile and data center products, and again, the era of constant price wars appears to be over.
As a longtime Micron shareholder myself, these analyst notes echo my own investment thesis in many ways. It's always good to hear independent confirmation of those core business advantages. Moreover, Muse expects Micron to kick off a brand new dividend policy at the upcoming analyst day in late May. That would be news to me, but it's a shareholder-friendly idea anyhow.
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