Wells Fargo: We will buy 3 stocks in 2021
Semiconductors are one of the indispensable industries in the modern world. It makes so many things we rely on or take for granted: Internet access, high-speed computers with high-speed memory, and even thermostats that control our air conditioners-no technology From a perspective, this does not use semiconductor chips. With the end of 2020 approaching, it is time for the annual valuation ceremony of the New Year’s stocks. Wells Fargo (Wells Fargo) analyst Aaron Rakers looks at the chip industry, saying it may become a profiteer for several companies next year. Analysts believe that a variety of factors will jointly promote the growth of chip demand in 2021
, including cloud demand, new game consoles and market prospects. The future of the PC segment. Overall, Rakers expects memory chips and 5G-enabled chips to become the driving force of the industry next year. Analysts predict that in the next 12 months, semiconductor companies as a whole will achieve 10% to 12% growth, but this is the industry average. According to Raker, some chip companies will show significantly higher growth, approximately 30% to 40% in the coming year. We can look at these companies, as well as the latest TipRanks data, to understand what makes these specific chip manufacturers so compelling. Micron Technology (MU) Among the leading chip manufacturers, Micron Technology has taken a place in the memory field. The company’s market value this year has expanded to 78 billion U.S. dollars, and the stock has appreciated by 32% so far this year. Looking back at 2020, Micron’s revenue has increased every quarter, from US$4.8 billion in the first quarter to US$5.4 billion in the second quarter to US$6.1 billion in the third quarter. This growth comes from computer data storage. , DRAM and flash memory storage areas. Earnings per share were 87 cents, higher than 71 cents in the second quarter and 36 cents in the first quarter. The third quarter is the fourth quarter of Micron’s fiscal year 20, and there has been a decline throughout the fiscal year due to the COVID pandemic. Revenue was 21.44 billion U.S. dollars, a year-on-year decrease of 8.4%. Operating cash flow fell from 13.19 billion U.S. dollars in FY19 to 8.31 billion U.S. dollars. In the last quarter, during 1QFY21 of Micron, the company announced the release of the world’s first 176-layer 3D NAND chip. The new chip is expected to achieve higher density and faster performance in flash memory, and the architecture is described as a “breakthrough breakthrough.” The number of layers is 40% higher than competing chips. Looking to the future, Micron Technology has updated its F1Q21 guidelines and expects total revenue to be between US$5.7 billion and US$5.75 billion. This is a 10% improvement over the previous guidance. Wells Fargo’s Aaron Rakers called Micron the best semiconductor idea for 2021. DRAM accounts for approximately two-thirds of Micron’s total revenue and more than 80% of the company’s bottom-line profits. In addition, Rakers pointed out: “Micron’s technology execution-1Znm DRAM’s leading position; recently outlined the growth of 1αnm to 2021, and Micron’s switch to 176-layer second-generation replacement gate 3D NAND to drive an improved cost curve. We will also emphasize that Micron’s performance on graphics memory (such as GDDR6X), multi-chip package (MCP) and high-bandwidth memory (such as HBME2) is active. ”And a target price of $100. This figure indicates that there is still room for 41% growth in 2021. (To view Rakers’ track record, click here) Micron has 24 recent records, and the records are divided into 19 purchases , 4 hold and 1 sell, and give the stock a strong buy consensus from analysts. The stock price is $70.96, and the recent appreciation has made them almost reach the average price target of $74.30. But just like Rakers’ prospects As suggested, the upside here may be more than 4.5%. AMD (AMD) had a total sales of 6.5 billion US dollars last year and a market capitalization of 110.7 billion US dollars. AMD is a giant company, but it has not even ranked among the top five largest in the world. Chip manufacturer. Despite this, AMD still has a solid position in the industry, and its x86 processors provide fierce competition for market-leading Intel (INTC). AMD’s stock price has shown solid growth this year and ends in 2020 On the occasion, it rose by 101%. Since the corona crisis reached its peak in the first quarter, AMD’s stock price has been growing on steady revenue growth. AMD’s revenue in the third quarter was $2.8 billion, an increase from $1.8 billion in the same period last year It exceeded expectations by 55% and exceeded expectations by 10%. Earnings per share were 37 cents, an increase of 220% year-on-year. The company attributed this increase to the strong growth of its PC, gaming and data center product lines, and touted it as the fourth consecutive Last quarter revenue increased by more than 25% year-on-year. AMD announced a new product for the scientific research market last month, the instinctive MI100 accelerator. This new chip is known as the fastest HPC GPU in the world and is also the first x86 with a performance of more than 10 teraflops Server. We also believe that with the arrival of 2021, with the release of the new Instinct MI100 GPU and RoCM 4.0 software platform, AMD’s deepening data center GPU strategy may become more and more obvious. AMD’s roadmap execution will continue Is an important focus – 7nm + Ryzen 4000 series, new RDNA Radeon Instinct data center GPU (MI100/MI120) and third-generation 7nm + EPYC Milan CPU…” Rakers’ position supports his “buy” rating, he The $120 price target means that the stock has 30% upside in a year. Analysts’ consensus view of AMD reflects some remaining vigilance on Wall Street. The 20 most recent comments on the stock include 13 buys, 6 holds and 1 sells. AMD’s stock price is $91.64, and like Micron, their recent appreciation has narrowed its average price target of $94.71. Western Digital (WDC) ranked highest on the list is the storage system designer and manufacturer Western Digital selected by Wells Fargo. The company’s products include hard disk drives, solid state drives, data center platforms, embedded flash drives and portable storage devices, including memory cards and USB thumb drives. WDC has had a difficult year in 2020, and its stock price has fallen 19% year-to-date. Despite this, the stock rose in November and December after the release of the strong financial report in November and December. The earnings report showed revenue of $3.9 billion, a year-on-year decrease of 3%, but net earnings per share The loss was 19 cents, a huge improvement from the net loss of 93 cents in the same period last year. Earnings growth exceeding expectations by 20% is the key to investors. Since the quarterly report, the stock has risen by 30%. The company also generated considerable cash flow during the quarter, and cash from operations increased by 111% over the previous quarter. WellsFargo’s Rakers acknowledged the difficulties of WDC 2020, but even so, he still thinks this is a stock worth risking. It has been our most difficult constructive appeal in 2020. Although we think it is still difficult to reach the lowest point of NAND flash memory (/2H2021?), and WD’s implementation in enterprise SSDs will still be unstable, our SOTP analysis Let us continue to believe that stocks exhibit compellingly attractive risk/reward. We still believe that Western Digital can push up the mid-cycle earnings per share to about $7/sh. However, we still believe that the main factor driving this basic growth is not only the recovery of the NAND flash memory business, but also that WD can see improvement in the execution capabilities of enterprise SSDs, and people continue to believe that WD’s HDD gross profit margin can be restored to Rakers said. To this end, Rakers rated WDC’s stock as “Buy” and set a target price of $65. If the target can be reached, investors will receive 29% in the next few months. Where is this computer storage manufacturer on the rest of Wall Street? TipRanks analysis shows that WDC is “buy”, so it seems mostly bullish. Of the 11 analysts tracked in the past three months, 7 are bullish and 4 are still on the sidelines. The stock has a target price of $54.44 and a return rate of 9%. (See WDC stock analysis on TipRanks) To find great ideas for trading technology stocks with attractive valuations, please visit TipRanks’ Best Buys to Buy, a newly launched tool that integrates all TipRanks stock insights integrate. Disclaimer: The views expressed in this article are limited to those with distinctive analysts. The content is for reference only. Before making any investment, it is very important to conduct your own analysis.