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© Reuters.
By Sam Boughedda
Mizuho analysts upgraded shares of Micron Technology (NASDAQ:), Western Digital (NASDAQ:), and Seagate Technology (NASDAQ:) to Buy based on peaking inventory and trough revenues, the analysts said in a note Friday.
Mizuho has a price target of $72 per share on Micron, $50 on Western Digital, and $82 on Seagate Technology. The analysts stated that the firm sees improving structural trends driving an accelerated path to supply/demand balance for memory.
“Near-term headwinds remain with high inventories and 1Q23E PCs/Handsets/Servers expected down 20%/20%/10% q/q, and Memory pricing down 10% YTD; however, we are close to a cyclical bottom,” they explained. “1Q23 could see the PEAK in inventories and a TROUGH in revenue, with fundamentals set to recover in 2H23E/2024E.”
Explaining the timing of the upgrades, the analysts said the firm had expected prolonged memory/HDD inventory builds and soft pricing. Still, they now see the first quarter as the peak in memory inventories, 2023E memory bit growth at potentially a 10-year low, and a China YMTC NAND exit and potential WDC-KIOXIA consolidation potentially benefitting NAND.
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