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Deutsche Bank sees more upside ahead for Micron despite an already massive year-to-date runup. The bank reiterated its buy rating on the semiconductor manufacturer ahead of its fiscal first-quarter results on Dec. 17. Analyst Melissa Weathers also hiked her price target to $280 from $200, citing a higher earnings forecast, which implies upside of 13%. Shares of Micron have surged 193% this year. MU YTD mountain MU YTD chart Weathers noted that the current memory environment is “significantly different” than the one last quarter and will result in stronger earnings per share power than she was previously expecting. “All told, we believe MU is well poised to benefit from the upcoming memory cycle, with HBM driving structural changes in the industry that could warrant a higher valuation profile,” she wrote. “In addition, we see MU as being particularly attractive among the memory names given its unique ability to prioritize profitability over market share in this environment.” One reason behind Weathers’ higher earnings forecast is higher pricing in dynamic random-access memory. She assumes price growth could reach the high 20% range next year, with room for upside side. “With the vast majority of MU’s business being done on a contract basis (average contract life: one quarter), we believe it may take time for this pricing goodness to flow through the topline fully as contracts come up, with price/GB likely to rise multiple qtrs in a row,” she added. “Assessing the magnitude of the price lift is difficult, but we note that in past memory cycles price increases have been as high as +50% y/y.” For its upcoming earnings report, Weather expects Micron’s revenues to come in at $12.8 billion, representing a 13% quarter-over-quarter increase. This would be towards the top end of the company’s prior guidance of $12.5 billion, plus or minus $300 million, and in line with consensus estimates. For the current quarter, the analyst expects a 12% quarter-over-quarter increase in revenue to $14.3 billion.
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