Micron will see huge gains after oversupply issues in the computer chips space are resolved later this year, Bernstein said. Analyst Mark Li upgraded Micron to outperform from underperform, saying in a note to clients Wednesday that computer chip prices will bottom in the second or third quarter of 2022. The analyst also hiked his price target on the stock to $94 per share from $58. The new target represents upside of about 28% from Tuesday's close of $73.11. "The macro concerns have prompted a selloff, but a correction to the memory market, if any, won't be prolonged [and] won't change the structure," Li wrote. "Our base case projects DRAM (Dynamic Random Access Memory) cycle bottoming in 1-2 quarters." The firm chose not to model any macro headwinds from the Russia-Ukraine war into their revision, saying the analysts do not know how long they will last. Micron's stock popped 4.4% in premarket trading. Shares for Micron have tumbled 22% this year from supply chain issues and inflationary pressures. Still, Bernstein analysts believe that oversupply in the sector will abate later in 2022. Other forces will help Micron as well. The firm believes China's production hasn't made enough progress to break up the DRAM oligopoly. Additionally, a supply chain disruption in neon gas will drive up prices for computer chips. The firm's analysts are significantly above consensus in their bullish take on the firm. Bernstein expects Micron's revenues to grow by 21% by 2024, and EPS CAGR to be 42%. The firm is about 15-25% above consensus, according to Bernstein. Bernstein also upgraded other computer chip stocks, such as SK Hynix and Samsung Electronics .
Stephen Nellis | Reuters
Micron will see huge gains after oversupply issues in the computer chips space are resolved later this year, Bernstein said.