This Analyst Calls Micron a Best Idea for 2022; Sees Over 70% Upside for the Stock

Micron (MU) delivered the goods in the November quarter and the market was duly impressed. Shares got a boost after the memory giant’s quarterly results and outlook beat expectations.

In F1Q22, the company generated revenue of $7.69 billion, a 33% increase on the same period a year ago and ahead of the Street’s call by $10 million. Non-GAAP EPS of $2.16 also beat consensus estimates – by $0.05.

The report managed to alleviate concerns of lackluster demand due to manufacturers stockpiling inventory in the PC market, thereby putting pressure on DRAM prices. Additionally, there were fears that a lack of non-memory products due to supply chain bottlenecks would create less need for Micron’s offerings.

The quarter’s display managed to assuage such fears, and the good news is that the road ahead looks clear too.

In FQ2, the company expects revenue to hit $7.5 billion and non-GAAP EPS of $1.95. This surprised the analysts, who cumulatively had expected revenue of $7.27 billion and non-GAAP EPS of $1.86.

Scanning the print, Micron’s biggest proponent on Wall Street was not disappointed.

“Solid November quarter results, better than consensus February quarter outlook, and easing shortages through CY2022 is a perfect setup for the shares to recovery after the PC DRAM ASPs are collapsing meme was nullified,” said Rosenblatt analyst Hans Mosesmann. “Indeed, non-memory component shortages are now behind the company and overall shortage easing becomes a tailwind for the company for the next couple of years, in our opinion.”

The semiconductor industry is known for its cyclical nature, and the 5-star analyst calls the present round “the Mother-of-All-Cycles.” Micron is well-positioned to benefit from secular 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 Best Idea for 2022 and reiterates a Buy rating for the shares, backed by a $165 price target. The implication for investors? Upside of 74%. (To watch Mosesmann’s track record, click here)

Most of the Street is on board with the Rosneblatt analyst’s take; based on 19 Buys, 4 Holds and 1 Sell, the stock has a Strong Buy consensus rating. Going by The Street’s $107.83 average price target, shares have room for 19% growth in the year ahead. (See Micron stock analysis)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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