Nomura Instinet analyst David Wong on Tuesday initiated coverage on Micron stock with a Neutral rating, predicting its profit margins will drop later this year.
The back story. Micron stock has rallied more than 30% so far in 2019, in anticipation of a recovery in chip prices later this year.
The chip maker is a leader in the DRAM and NAND memory-semiconductor markets. DRAM stands for dynamic random-access memory, which is used in desktop computers and servers, while NAND is flash memory, found in smartphones and solid-state hard drives.Micron will reach “profitability levels in the future that are similar to what we have seen in the last four years,” he wrote. “However, in the immediate future, we expect continuing pressure on memory profitability through 2019.
Wong noted how the memory industry has consolidated to only three major players–Samsung, Hynix and Micron–which will reduce volatility in prices and profit margins versus history. Looking ahead. Wong started his price target for Micron shares at $45, representing 6% upside to the current stock price.
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