MU Stock Drops Premarket As Relief Rally Fades – UBS Says Memory Super Cycle Will 'Defy Traditional Analytical Norms For Stock'

• MU stock declined 2.5% in Thursday’s premarket sessions.
• UBS said its checks suggest continued pricing strength in both DRAM and NAND.
• Retail sentiment on Stocktwits for MU remained ‘bearish.’

Micron Technology shares fell 2.5% in Thursday’s premarket session, as markets pulled back from the prior day’s rally sparked by a U.S.-Iran ceasefire. However, the stock—one of the most closely watched in the memory chip space amid the sector’s recent rally—may be far from losing momentum.

In a recent investor note, UBS said its latest industry checks point to continued pricing strength in both DRAM and NAND. The research firm reiterated its view that the memory market is in the midst of a super-cycle that will "likely defy traditional analytical norms for the stock." 

There is growing evidence that memory companies are willingly trading some near-term upside for longer-term visibility and, by extension, more stable earnings, margins, and return on investment across the cycle, which strengthens the conviction in the durability of this upcycle, UBS said.

The research reiterated its ‘Buy’ rating on MU stock and bumped its price target to $535 from $510. The new target implies an over 30% upside to the stock’s last close.

Memory Chips’ Hot Rally 

Memory chip stocks have been on a roll for about a year as surging demand from AI data centers drives shortages and pricing gains across the industry – a trend increasingly reflected in the latest quarterly earnings from major players including SanDisk, Seagate Technology, and Western Digital.

However, investors have been flummoxed over Micron. Its shares have traded in a see-saw manner since early February. In fact, its blowout earnings on March 18 triggered a sharp drop in the days that followed.  

Analyst, Retail View On MU

Analysts broadly believe shares will rebound, especially given Micron's strong forecast and signals that memory chip shortages will persist in the foreseeable future.

Currently, 38 of 43 analysts recommend ‘Buy’ or higher on MU, while five recommend ‘Hold.’ Their average price target of $526.10 implies a 30% upside from the stock’s last close.

However, on Stocktwits, the retail sentiment for MU has been declining since the start of the week and was ‘bearish’ as of early Thursday. 

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