When Morgan Stanley was bullish
According to a CNBC article dated May 9, Morgan Stanley analyst Joseph Moore, in a client note, reiterated an “overweight” rating and a $65 price target for Micron Technology (MU) since he saw strong memory demand from cloud companies. He expected NAND (negative AND) prices to fall. He also expected Micron’s NAND cost per bit to fall in line with the price.
However, Moore was optimistic about DRAM (dynamic random access memory) prices, even though Apple (AAPL), a large customer, cut iPhone production, which significantly impacted its suppliers’ sales. He believed that seasonal demand in the second half of the year would revive DRAM orders from Apple and other smartphone makers. A more diversified memory demand from the PC, smartphone, and cloud data center markets could also keep demand healthy.
Why Morgan Stanley downgraded Micron
Micron stock was close to Morgan Stanley’s $65 price target at the end of May, which was earlier than expected. But Moore remained bullish on DRAM and bearish on NAND for the second half of 2018 and stated that Micron stock has already priced in the scenario for the second half of the year. On May 31, he went from bullish to neutral after talking to industry sources that use memory chips.
According to another CNBC article, Moore stated in a client note that data points from memory chip customers suggest that the seasonal rebound in the second half of the year is less likely. He noted that cloud customers and other potential buyers were able to easily access memory chips at better prices than they were a few months ago. That indicates that DRAM prices might stabilize in the near future.
Moore advised investors that it is a little early to sell Micron, but they should be cautious and watch for future DRAM prices.
Next, we’ll see what other analysts are saying about Micron.
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