BMO Capital Markets upgraded shares of semiconductor maker Micron Technology on Wednesday, saying the continuing chip shortage should have a positive effect on pricing. "After staying on the sidelines for some time, the core of our positive thesis is due to the potential we see for a continued constrained supply environment into 2022 driven by a combination of supply dynamics/CapEx discipline, and demand drivers," BMO's Ambrish Srivastava said in a note. The bank believes the lack of chip inventory will keep pushing prices up, while demand for semiconductors will remain strong. BMO upgraded the semiconductor stock to an outperform rating from market perform. The firm also raised its price target to $110 from $90. The new price implies 32.6% upside to the stock's closing price of $82.93 on Tuesday. Srivastava noted chip demand from the personal computer sector appears to be retreating, but that appetite in data-center, artificial intelligence-based server and mobile segments should make up for the slowdown. "We believe these concerns, while valid, would likely end up being short-term in nature given our longer term thesis on both supply and demand," Srivastava said. Shares of Micron are off by 1.44% in June, but are up more than 10% in 2021.
Micron Technology headquarters in Boise, Idaho, March 28, 2021.
Jeremy Erickson | Bloomberg | Getty Images
BMO Capital Markets upgraded shares of semiconductor maker Micron Technology on Wednesday, saying the continuing chip shortage should have a positive effect on pricing.