Micron Stock Forecast: Is MU Stock a Buy?
You have probably heard about the microchip shortage that has been straining various supply chains around the world. This is important to follow for a Micron stock forecast. Automakers, for example, have completely halted production simply because they couldn’t get a hold of the microchips. They need them to manufacture their vehicles.
These days, cars are becoming increasingly smart, which is why these chips have become so essential. Some have even referred to Tesla vehicles as “smartphones on wheels.” As a result, products from chip makers like Micron are more in-demand than ever. Everything from cars to thermostats continues to get smarter.
Of course, shortages also create an interesting market dynamic. Given current market conditions, we’ll take a look at the state of affairs for Micron. We’ll look at predictions for its stock going forward.
What is Micron?
Micron (Nasdaq: MU) is an American company based in Boise, Idaho that produces microchips and data storage. That includes RAM, USB flash drives and flash memory. PC users will know its products by brand names Crucial and Ballistix.
Micron was founded in 1978 and began manufacturing chips in 1981 when it produced its first 64K DRAM chips. It then went public in 1984 and has continued to manufacture chips ever since. When it comes to a Micron stock forecast, this long history helps.
Thanks to trends like the Internet of Things, microchips have been needed in a larger and larger scope of products. That means the demand for Micron’s products has increased, too. The question is whether it can keep up with the demand and how that affects its share price, which we will explore in the next section.
Micron manufacturers many different products, but that isn’t always obvious to us as consumers. That’s because its chips are often embedded in cars, electronics, computers and almost anything that has internet connectivity. Plus, as mentioned earlier, when people do buy Micron’s products directly, they may be doing so under its brand names Crucial and Ballistix.
In particular, here are some of the products Micron manufacturers:
- DRAM. Almost known as dynamic random access memory, DRAM is memory used in desktop computers, laptops, smartphones and other devices.
- NAND memory. NAND, or flash memory, is the type of memory used in USB flash drives, solid-state drives and other types of devices.
- NOR flash memory. Another type of memory, NOR has faster read speeds than NAND, but it is more expensive and takes longer to erase and write new data.
As you can see, the core of Micron’s business is making types of memory storage. Memory is essential to nearly any type of electronic device, hence the strong demand for products from Micron and other chipmakers as of late.
Micron Stock Forecasts
Micron stock predictions are looking quite bullish at the moment, which makes sense given the increased demand for microchips. The reason automakers can’t find enough chips for their cars is largely due to the pandemic.
COVID-19 forced many people to work from home, meaning they needed better connectivity. That drove the demand for more devices with microchips embedded. This was made evident by Zoom (Nasdaq: ZM) stock, which soared to around $500 per share in late 2020, up from around $75 per share at the beginning of the year.
With this as a backdrop, it should be no big surprise that Micron stock has a rather bullish outlook. CNN Business analysts have a median price target of $100.00, which is a 39.4% increase. On the high end is $165.00 or a 130.0% increase. Even the most bullish of analysts give it a target of $70.00, which is just a slight decrease.
These generally positive Micron stock forecasts are not unique to CNN, either. Other analysts, such as those on TipRanks, have similar projections. The average projection there is $102.73, which is slightly higher than that of CNN. It also has a low target of $70 and a high of $165.
Revenue and Investor Sentiment
The numbers look good for Micron with green nearly across the board. As of Q3 2020, its revenue increased 36% year-over-year to $8.27 billion. Net income increased 175% to $2.72 billion. Diluted earnings per share was 2.39, an increase of 175%. And its net profit margin was 33%.
With these numbers for a Micron stock forecast, analysts have a very positive sentiment about Micron stock.
What’s more, most analysts are issuing buy recommendations for Micron stock. For example, CNN Business has 27 analysts recommending a buy, while five say to hold. There are no sell recommendations. Similarly, 18 TipRanks analysts recommend buying the stock, while four recommend holding and none say to sell.
It’s the same story at MarketRank, where there are 23 buy ratings, six holds and no sell ratings. What’s more, MarketRank notes the stock has been the subject of 17 reports in the past 90 days. That indicates a strong interest in the stock and also that it has been studied extensively.
Should You Invest in Micron Stock?
Micron looks like a strong candidate for addition to anyone’s portfolio right now. Most analysts recommend buying it, and market conditions suggest demand for Micron’s products will remain high. After all, consumer spending still runs high as consumers as some consumers embrace the “homebody economy.”
What will happen in the next year or two is difficult to predict, but the Micron stock forecast looks good. Seemingly every type of hardware integrates microchips these days. In other words, the demand for Micron’s products should remain high as well. Whether it’s buying a new laptop or a new Peloton, microchips can be found in almost everything we buy these days. And that means Micron’s products will be essential to keeping our economy going.
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About Bob Haegele
Bob Haegele is a personal finance writer who specializes in investing and planning for retirement. His hefty student loan burden inspired him to pay off his loans, and now he’s helping others get their finances in order. When he’s not writing, he enjoys travel and live music.