Morgan Stanley upgraded Micron Technology from Equalweight to Overweight on Monday, raising its price target to $220.00 from $160.00.

The upgrade comes as momentum in core DRAM pricing continues to exceed expectations, with potential for double-digit sequential price improvements in the fourth quarter of 2024 and first quarter of 2025, according to the investment bank.

Morgan Stanley noted that industry contacts increasingly believe DRAM may remain tight for several quarters, with DDR5 spot pricing already up 15% since Micron’s most recent guidance.

The firm specifically highlighted server memory, stating that anecdotal evidence suggests DDR5 server pricing could increase by double digits in both Q4 and Q1, making current estimates likely conservative.

While Micron shares have already outperformed, trading near their 52-week high with a P/E ratio of 24.75, Morgan Stanley sees further upside potential as upward revisions continue and sentiment, primarily affected by High Bandwidth Memory (HBM) concerns, has not yet turned universally positive.