Micron Technology Inc. (MU) shares were pulled down last week by the general market selloff of memory chipmaker stocks that was sparked by fears of declining NAND memory prices. Yet, one analyst at Morgan Stanley is adamant that the fears are irrational, as NAND memory only affects a portion of Micron’s overall business. He believes the stock will rise to $55, almost 38% higher than Monday’s closing price of $39.90, according to a note published last Friday by Barron’s.

Micron is up 82% year to date (YTD). It had reached a high for the year at just under $50 before beginning to decline at the start of last week. Since that high, the stock has fallen about 20%. Trading on Monday saw the stock decline 4.98% for the day.

Much of the selloff appears to be the result of a report published by Morgan Stanley last Monday, which revealed expectations of peaking prices for NAND flash-memory chips. One of the bank’s analysts, Katy Hubert, projected that NAND prices would fall between 7% and 15% every quarter beginning with the first quarter of next year, according to a separate note from Barron’s.

Hubert said nothing specifically about Micron, and while another Morgan Stanley analyst, James Moore, argued in favor of the company’s prospects, his defense and raising of the price target for the stock were not enough to quell investors’ fears. (To read more, see: Micron Stock: Is the Rally at Risk?)

It’s about the DRAM, not the NAND

Failing to keep a selloff of Micron from taking hold, Moore made another statement last Friday, reaffirming his optimistic outlook for the company and his $55 price forecast.

DRAM memory is the bigger key to Micron’s business than NAND. Moore claims that NAND comprises less than a third of the company’s business and contributes far less than one third to the company’s profits. Projecting DRAM prices to remain strong, Moore expects the chipmaker to have “significant earnings growth potential from here, and that this pullback is an opportunity.” (To read more, see: Western Digital Falls on Peak NAND: Morgan Stanley).

Fear Radiates the Memory Market

Robert Maire, analyst at Semiconductor Advisors, affirmed the buying opportunity on Friday, arguing that the market selloff is just a “knee jerk” reaction of investors based on a “perceived” fear of falling NAND prices. He stated that, “Anything related to memory is radioactive,” insinuating that the NAND price projections are radiating through the investment world and infecting anything related to memory.

The selloff is probably just a corrective pullback from a sector that has had a pretty long run, but once the market separates out the reality from all the fear, things should calm down. If DRAM really is the key to Micron’s business, then it, at least, should bounce back. If Moore is right, it’ll bounce all the way up to $55.

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