Micron Technology’s (NASDAQ: MU) breakout after it crossed $50 a share proved a turning point for bulls. The stock failed on many occasions, especially after strong quarter earnings, to hold its rally. With the earnings report coming due this Thursday, the company will no doubt deliver an outstanding quarter. It has every reason to raise its outlook. Memory prices keep rising. But is MU stock worth $100 a share? Nomura’s Romit Shah thinks so.
Per Tipranks, the Nomura analyst has a solid record. With an average return of 37.7%, a 64% success rate (119 / 185 ratings) over a two-year period, the analyst is correct on MU stock 79% of the time.
The analyst cites stronger DRAM prices, capital returns through a dividend for the first time, plus a share buyback, and profitability from NAND. The stock may very well rally towards the $100 mark post-earnings.
MU stock is simply still too cheap at a P/E barely below 10 times and a forward P/E of seven times. The risk of the excessively bullish call lies on one factor: DRAM and NAND prices. For now, DDR3 and DDR4 prices are holding strong but an economic pause would slow capex spending for servers. The smartphone refresh depends on Samsung S9, Huawei’s P20, Xiaomi, and Apple iPhone 8 and iPhone X.
One more requirement: if memory suppliers like Samsung limit output, prices will stay high, enriching Micron with more profits.
