Today we take a look at the technicals of two of our best stock picks for the year 2020: NKE and MU
Nike Inc. (NKE)
Reasons for selection:
- Key driver of growth
- Unique asset with China
- Projected long-term earnings growth
Our Price Target USD$118.33
“We believe Nike is on the cusp of a sharp acceleration in EPS growth,” Goldman Sachs analyst Alexandra Walvis said told investors. The firm also said it sees earnings growing 19% annually over the next 3 years and that China should help accelerate that growth at almost 3x the rate of other regions.Her 2022 earnings per share estimate of $4.22 is 5% ahead of consensus. China is the key driver as Nike can grow its China revenues at a high teens pace, contends Walvis. She upgraded to conviction buy rating and has a price target of USD$112. Reference link
Nike is reporting earning today (12/19/2019) after the market closes.
Micron Technology Inc. (MU)
Reasons for selection
- Market expansion into 5G technology
- Price improvement in DRAM, NAND and SSD
- Increased prospect of supply tightness and shortages
- Increased prospect in revenue recovery in late 2020
Our Price Target USD$70.53
Needham's analyst Rajvindra Gill expects a Q2 bottom for NAND and DRAM pricing as well as a mid-cycle recovery in 2020. The analyst adds that a "significant rebound" in memory pricing will be driven by multiple catalysts that include 5G smartphones, a rebound in hyperscaler spending, and normalized supply/demand. Gill is also raising his FY21 EPS view on Micron to $1.58 from $1.15. He has a buy rating and a price target of USD$70. Reference link
Micron reported earnings yesterday (12/18/2019). Earnings beat many expectations triggering a storm of price updates.
Goldman Sachs analyst Mark Delaney raised his price target for Micron Technology to $66 from $59 and reiterates a Buy rating on the shares following last night's fiscal Q1 results. The analyst is "encouraged" that Micron believes its business will bottom cyclically in the February quarter, which he notes is consistent with his expectations and positive view on memory stocks. Delaney continues to believe that Micron's valuation is "supportive" in the context of his view that industry supply/demand dynamics are improving into 2020. Reference link
Watch this video to get the technical insights.
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