| | | Micron remains top semi pick at Citi after October industry sales top estimates
Dec. 05, 2023 7:42 AM ET
By: Chris Ciaccia, SA News Editor
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Citi said it is "warming" on semiconductors and is keeping Micron Technology (NASDAQ: MU) as its top pick in the chips industry after the industry's top trade group released October monthly sales that topped estimates.
According to the Semiconductor Industry Association, October monthly sales came in at $46.4B, down 6.3% month-over-month, but above Citi's estimate of $44.9B and above seasonality of down 8.3% on higher flash sales.
As a result, Citi analyst Christopher Danely raised his estimate on 2023 semiconductor sales to down 10% year-over-year from down 11%, or $517.3B.
Danely said that while unit growth ex-discretes was below seasonality, at down 16.1% month-over-month, pricing was above seasonality, up 12.9% month-over-month, due in part to analog and dynamic random access memory pricing.
"DRAM pricing has started to rebound in [second-half of 2023] as DRAM production cuts start materializing," Danely wrote in an investor note. "As such, Micron is our top pick."
Danely also raised his 2024 sales estimates for the semiconductor industry to up 7% year-over-year, or $555.9B, compared to a previous view of up 5%.
"With units declining 20% in 2023, this would be the worst year since 2001," Danely explained. "We believe this should provide some impetus for inventory replenishment in 2024. As a result, we believe 2024 growth could continue to move upward."
In addition to keeping Micron ( MU) as its top pick, Citi has buy ratings on ON Semiconductor ( ON), Analog Devices ( ADI), AMD ( AMD), Microchip Technology ( MCHP) and GlobalFoundries ( GFS). |
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