By Tomi Kilgore
'Actual' demand is improving across all markets
Shares of Micron Technology Inc. rallied toward a near seven-month high Tuesday, after Mizuho analyst Vijay Rakesh went back to being bullish on the memory chip maker on surprisingly improving demand trends, which should provide a tailwind for Micron, as well as Western Digital Corp., into next year.
Rakesh upgraded Micron (MU) to buy, after downgrading it to neutral on Oct. 20. He boosted his stock price target to $95 from $75.
When Rakesh downgraded Micron last month, he cited expectations of a soft demand outlook for the first half of 2022 for PCs and notebooks, server and handset markets.
"However, our recent checks indicate the 'ACTUAL' demand is improving across all three markets," Rakesh wrote in a research note, with first-quarter PC/NB builds "only" flat to down 5% from the previous quarter, compared with expectations of a 10% to 15% decline and handsets flat versus expectations of down 10%. He also believes server demand could improve.
Micron's stock ran up 2.0% in midday trading, putting it on track of the highest close since May 7. It had soared 22.8% from the Oct. 20 close through Monday, while the PHLX Semiconductor Index had run up 14.0% and the S&P 500 index had gained 3.2%.
Rakesh also upgraded Western Digital (WDC) to buy after downgrading it to neutral last month, while boosting his price target to $75 from $55. The stock ran up 5.6% in midday trading, after edging up just 0.9% from Oct. 20 through Monday.
"We now see potentially better-than-expected pricing trends in 1Q22 and 2Q22," Rakesh wrote. "We believe 2H22 could see memory pricing stabilize further if PC build trends continue to outperform."
(END) Dow Jones Newswires
November 23, 2021 11:55 ET (16:55 GMT)
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