Street calls : 2024 of the week: Upgrades for Micron, Magnite and GoodRx Holdings

Street calls of the week: Upgrades for Micron, Magnite and GoodRx Holdings



Here is your Pro Recap of the top takeaways from Wall Street analysts for the past week: upgrades for Micron, Magnite and GoodRx Holdings; downgrade for Him Hers Health.

InvestingPro subscribers always get first dibs on market-moving rating changes.


What happened? On Monday, Morgan Stanley upgraded Micron (NASDAQ:MU) to Equalweight with a $130 price target

What’s the full story? Morgan Stanley acknowledges that maintaining a negative stance on Micron for an extended period was a misstep. While they are not yet optimistic, they concede that they should have anticipated the fundamental and narrative implications of the strength in AI specialty memory.


Three key errors were made by the research team according to their research report. First, they placed too much emphasis on recent losses. When they initially became pessimistic about MU two years ago, they predicted significant cash burn, financial losses, and a substantial erosion of book value. When losses turned out to be quite large – $7.1 billion of GAAP over a five-quarter downturn leading to a 14% reduction in book value – they expected this to have a greater impact on valuation than it did.

Second, Morgan Stanley underestimated the significance of High Bandwidth (NASDAQ:BAND) Memory (HBM) to the narrative. HBM has emerged as a critical technology for AI, and while Micron is just now beginning to reap the benefits of this, having missed the HBM3 phase of the market, they have a robust 3e product that will firmly place them in second place. This was known six months ago, and despite some concerns that current wafer commitments are too high, this still propelled Micron directly into the winners’ camp during a phase when proximity to AI drove most of the alpha generation in the space.

Third, the bank wrote they underestimated the importance of HBM in turning around the base business. While they believe their Total Addressable Market (TAM) analysis of HBM remains reasonable, they are now seeing Trendforce project 15% of wafer starts going to HBM by 4Q24, and Applied Materials (NASDAQ:AMAT) suggesting they are already at 20%. This is too high, at least relative to the consumption suggested by even the NVIDIA (NASDAQ:NVDA) bull case, but the impact on non-HBM is having more of a negative impact on industry supply than they had anticipated.

demait account
demait account

With these factors driving near-term fundamentals – they could see a positive preannouncement in upcoming conferences – and a positive view on AI semis, Morgan Stanley is moving to Equalweight on MU

Equalweight at Morgan Stanley means “The stock’s total return is expected to be in line with the average total return of the analyst’s industry (or industry team’s) coverage universe, on a risk-adjusted basis, over the next 12-18 months. “

How did the stock react? Micron opened the regular session at $127.30 and closed at $129.00, a gain of 2.96% from the prior day regular close.

Penn Entertainment

What happened? On Tuesday (actually Monday after-hours), Raymond James started new coverage on PENN Entertainment (NASDAQ:PENN) at Outperform with a $20 price target.

What’s the full story? The first quarter of this year presented a challenging environment for PENN, characterized by several factors. These include weakness in the land-based business, primarily influenced by weather conditions, higher-than-expected losses in the digital sector, and a significant selloff due to management-related issues.

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