Micron Technology shares got a rating upgrade by Morgan Stanley, on hopes for near-term boost from rising DRAM prices.
Morgan Stanley analysts raised their rating on the computer memory/data storage company’s stock to equal weight from underweight. Joseph Moore indicated in a note that DRAM prices are rising as trade tensions are spurring companies to accumulate inventory, leading him to revise the previous rating on Micron. Spot prices of DRAM have rallied over 20% in the last three weeks, according to Moore.
However, Moore believes that DRAM market would be largely oversupplied in the longer-term. Once global geopolitical risks subside, DRAM and NAND prices will likely start dropping once again, according to Moore. This could push Micron’s cash flow into negative territory and its share price at around book value, as indicated by the analyst.
But Moore also mentioned another, more positive scenario for Micron. If cloud and smartphone inventory builds reaccelerate, Micron could experience tailwinds in 2020 and its stock could touch new highs – according to Moore.