In Spite Of A Few Rough Months Ahead, Micron Remains A Buy

According to Raymond James, investors should buy Micron Technology MU for a rebound later this year as the chip maker will probably experience a tough few months until the end of the year.

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This semiconductor company (ticker: MU) is a leader in the semiconductor market and provides flash memory, which is found in smartphones and solid-state drives as well as dynamic random-access memory (DRAM), which is used in desktop computers and servers.

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A report published by Trade Algo on Monday confirmed that analyst Srini Pajjuri rated the company's stock as Outperform and set a price target of $70 for its shares.

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“It is our expectation that Micron's margins and earnings will bottom out in the May quarter [quarter], and we believe a cyclical recovery starting in 2H23 will be the result of aggressive production cuts in the industry," he wrote.

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There was a slight decline in shares to $59.65 in midday trading as shares fell 2.5%.

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The forecast for Micron's fiscal 2023 revenue was reduced to $15.4 billion from $16.4 billion in the wake of conversations he had with memory suppliers in Asia which indicate prices for memory are dropping. Wall Street consensus predicts revenue of $15.9 billion for the company in fiscal 2023.

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The analyst believes the trough quarter for Micron stock will be this year's fiscal third quarter, which ends in May. Micron's stock has posted improved financial results for six to eight quarters once its worst quarter is over, the analyst says.

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“The risk/reward ratio of [Micron's] investment is attractive to us," he wrote.

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ICE Semiconductor Index-tracking iShares Semiconductor exchange-traded fund (SOXX) saw a 12% decline over the past year, compared with a 23% decline in the stock.

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A report on the company's fiscal second quarter will be released after the market closes on Tuesday.