Shares of Micron Technology rallied, moving briefly into position to close at the highest level in more than 20 years after two analysts raised their targets for the stock price.
The stock rose as high at $64.49, while any close above $63.95 would be the highest end-of-day level since Micron finished the day at $66 on Sept. 20, 2000. Shares were at $63.84 in midafternoon, for a gain of 3.9%.
Mizuho Securities analyst Vijay Rakesh wrote in a client note early Monday that while there has been a significant pause in data-center capital expenditures in the fourth quarter, which ends in December, he expects spending to snap back in the new year.
He said that his team has determined that Facebook (ticker: FB) and Microsoft (MSFT) are likely to spend more money on data centers in the first quarter of 2021. Rakesh wrote that together, they will drive a 10% to 15% rebound—a surge that will benefit Intel (INTC) and Advanced Micro Devices (AMD), but also Micron (MU).
Micron, Rakesh wrote, sells a lot of memory for use in cloud and hyperscale data centers. He raised his target for the stock price to $70 from $56.
Deutsche Bank analyst Sidney Ho wrote in a note to clients Sunday that Micron stands to benefit from the global recovery from pandemic-related shutdowns. Demand in data centers, for 5G smartphones, and for videogames will accelerate, benefiting the company, he said.
Deutsche Bank increased its target price to $70 from $60.
Micron, which makes dynamic random access memory, is set to benefit from strong demand in the smartphones business, but also from graphics cards and the new videogame consoles, data center applications, and from cryptocurrency miners, Ho wrote. Because there was little growth in memory supply during the pandemic, he said, there is some concern over shortages in the second half of 2021.
He expects prices to stabilize in the first quarter of next year, and likely increase in the second.
The outlook for flash memory, the kind often found in smartphones for storage, is more mixed. Ho wrote that his team has concerns about inventory adjustments following the Lunar New Year, but that there remains a lot of inventory for the original equipment manufacturers to work through. Consumer demand for solid-state drives has stabilized, but enough inventory remains in the supply chain that Ho says pricing is likely to be soft through the first half of next year.
Intel recently said it was selling its flash-memory business.
Micron stock has gained more than 15% this year and closed at $61.40 Friday. The PHLX Semiconductor index has advanced 39%.
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November 24, 2020 at 02:34AM
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Micron Technology Stock Gains. Analysts See Rebound for Chips. - Barron's
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