The fall in the memory market has led Micron Technology stock (NASDAQ:MU) down this year, but one analyst says the American semiconductor company might make a strong rebound in 2023 and give hefty profits to investors.
Market Analysis of Micron Stock
Loop Capital’s Charles Park just began coverage on Micron stock (NASDAQ:MU). The analyst’s rating is buy, and their price goal is $70, implying a 25% increase from present levels. With shares of the memory specialist down 40% year in 2022, Park feels Micron stock (NASDAQ:MU) is an appealing risk-reward proposition right now.
Should investors take the risk and acquire Micron Technology, particularly because the memory industry may stay under pressure owing to diminishing demand from the smartphone and personal computer markets? Let us investigate.
The memory market may reach a low next year.
The Loop Capital analyst believes that near-term difficulties in the semiconductor market and macroeconomic headwinds may weigh on Micron stock (NASDAQ:MU). That’s hardly unexpected, given the company’s forecast for the current quarter predicts a significant reduction in both top and bottom lines due to oversupply in the memory market.
Prices of dynamic random-access memory (DRAM) and NAND flash memory chips fell sharply due to low demand and huge inventory levels. As a consequence, Micron anticipates sales to plummet 45% year on year to $4.25 billion in the current quarter. Non-GAAP (adjusted) profits for the first quarter of fiscal 2023 (which began on September 2) are estimated to be $0.04 per share, a significant decrease from the previous year’s number of $2.16 per share.
The bad news is that the memory price decrease is here to stay, at least for the time being, since demand is unlikely to increase. Park, on the other hand, believes that the DRAM market will bottom in the first part of fiscal 2023. He also thinks that Micron’s stock price might bottom a few quarters before that.
What should investors in Micron Stock do?
Unless and until there is solid evidence of a memory market comeback, Micron stock (NASDAQ:MU) might fall. Analysts estimate the company’s sales to plummet 38% yearly to $19 billion in fiscal 2023. Its profits are predicted to fall from $8.35 per share to $0.29 per share.
However, Micron stock (NASDAQ:MU) is predicted to make a stunning turnaround beginning in fiscal 2024 (which begins in September 2023).
As a result, investors should monitor events in the memory sector and begin acquiring Micron stock when indications of a reversal emerge. Furthermore, the long-term prospects of the memory industry and the company’s ambitious investment strategy over the next several decades indicate that this semiconductor stock is designed for long-term development.
That is why intelligent investors should keep Micron stock (NASDAQ:MU) on their watch lists and purchase it when there are apparent indications of a comeback.
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