Shares of Micron Technology Inc could rise another 50 percent on stronger demand for computer memory, Barron's financial newspaper said in its latest edition.
Micron, a maker of dynamic random access memory, or DRAM, has already seen its stock increase more than five-fold to $34 in just two years. But the shares could still rise another 50 percent and yet trade at price-earnings discount to the broad semiconductor group, Barron's said in its issue dated Oct. 6.
DRAM demand has increased because of new orders by businesses to replace workplace computers following Microsoft's end of support for its Windows XP operating system. There's new need now for computer power to drive so-called "big data" applications designed to quickly glean selling opportunities from information.
The number of key DRAM makers has decreased to three from than 20 in the 1990s with an industry shakeout. That means there's more supply discipline among manufacturers, Barron's said. It helps, too, that smaller and smaller small chips are harder to make.
"None of this will bring an end to memory cyclicality, but it should provide steadier cash flows, leading to less fearful stock valuations," the article said.
Micron stock closed on Friday at $33.94. It could rise to over $50 next year and still trade at 12 times estimated earnings, Barron's said.
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