Micron Technology Inc. shares rallied for their best day in more than a year Monday after a huge overhang on the memory-chip market eased when, as one analyst put it, the Easter Bunny left a big present for the Boise, Idaho-based chip maker.
shares rallied as much as 9% to close up 8% at $63.27, for their best one-day percentage gain since March 16, 2022, when shares finished up 9%. In comparison, the S&P 500
rose 0.1% and the tech-heavy Nasdaq Composite
slipped less than 0.1%.
On Monday, Citi Research’s Christopher Danely said the Easter Bunny had brought Micron a gift after Samsung Electronics Co.
reported late last Thursday that it would cut memory-chip production following months of holding out as prices fell. With markets closed for the Good Friday holiday, stocks did not trade until Monday following.
Micron specializes in DRAM, or dynamic random access memory, the type of memory commonly used in PCs and data centers, and in NAND chips, which are the flash memory chips used in smaller devices like smartphones and USB drives.
“This is a big deal,” Danely said, noting that Samsung makes up half of the world’s DRAM market and that he had expected such a cut following production and capital-expenditure cuts from Micron and SK Hynix
Read: Is Micron selling memory chips for less than they cost to make? That may mean the bottom is near.
“We believe the cuts to both capex and production by the three DRAM providers should help ensure a DRAM recovery beginning in [the second half of 2023], especially considering PC demand (roughly 10% of DRAM) appears to have stabilized and we expect both data center demand (roughly 40% of DRAM) and handset demand (roughly 30% of DRAM) to both stabilize in [the second half of 2023],” Danely said, reiterating his buy rating on Micron and $75 price target on the stock.
At the end of March, Micron reported its largest loss on record, but executives said inventory issues may have been alleviated by some $1.4 billion in write-downs.
Of the 36 analysts who cover Micron, 27 have buy-grade ratings, seven have hold ratings and three have sell ratings, along with an average price target of $69.30, according to FactSet data.