Analyst Note| Abhinav Davuluri, CFA |
We attended Micron’s 2022 investor day and came away with renewed confidence in our positive thesis for the memory supplier. Over the past few years, Micron has significantly improved its profitability, technology and product portfolio, and balance sheet. We are most optimistic on Micron’s DRAM segment, which is expected to remain over 70% of total revenue in future. Given consolidation in the DRAM market and Micron being the first to deploy industry leading 1-alpha (14-nanometer) DRAM, we think Micron’s DRAM business is well positioned to take advantage of diverse end-market growth. Specifically, management expects the memory opportunities in the data center, industrial, and automotive markets to be the fastest growing over the next five years. We agree with this sentiment and view shares of no-moat Micron as undervalued relative to our unchanged $90 fair value estimate.