Micron could be on the verge of gaining stronger pricing power, according to Deutsche Bank. The firm upgraded Micron stock to buy from hold on Sunday, and upgraded its target price to $85 from $65. Deutsche’s new forecast implies about 19% upside from Friday’s $71.53 close. Stock in the memory and storage solutions company has soared nearly 40% from the start of 2023. MU YTD mountain Micron stock. Analyst Sidney Ho says Micron’s pricing power with semiconductor direct random access memory is hitting an inflection point, and could push the company to beat Wall Street estimates for first-quarter revenue and earnings guidance in November. The analyst expects full-year 2024 adjusted earnings of $3 per share and $7.50 in 2025, up from $1 and $5, respectively. “While we acknowledge that MU shares have held up much better than our expectation during the downcycle, we expect further appreciation as estimates increase and valuation multiple (based on [price-to-book]) expands,” Ho said. The analyst added that a previous cautious stance on Micron underpinned by excess inventory has largely abated, and Micron is now seeing stronger demand and pricing power for chips like the HBM DDR5 line of memory chips. “While our previous neutral stance on MU was driven by the levels of excess inventory in the supply chain and weak macro end-demand, we now see the worst of the downcycle as behind us, given aggressive production cuts by all suppliers, as well as pockets of demand strength particularly in AI servers (for both HBM and DDR5),” she said. MIcron shares rose 2.3% in premarket trading. — CNBC’s Michael Bloom contributed to this report.
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