Micron Suspends Executive Bonuses. The Stock Was Upgraded, Too.

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Micron Technology

has suspended bonuses for executives, and the stock earned an upgrade, though the two don’t appear to be connected.

Micron (ticker: MU) said late Thursday a board committee had approved plans to cut certain executives’ salaries and suspended all executive bonuses in the fiscal year 2023. CEO Sanjay Mehrotra’s pay will be cut by 20%, according to a regulatory filing. The company is also cutting its workforce by 10%, it said in December.

Micron

stock was also upgraded at Mizuho, which also raised its ratings on

Seagate

(STX) and

Western Digital

(WDC) in anticipation of memory chip demand rebounding in the second half of the year. All three were raised to Buy from Neutral.

It’s a strange time for upgrades. The stocks have all made impressive gains so far this year as technology companies in particular have rallied as layoffs and cost-cutting measures have spread across the sector. Mizuho’s analysts, though, think the three stocks have further to rise this year.

While the analysts had previously said they expected a prolonged memory chip and hard disk drive inventory build up, and soft pricing, they now believe a cyclical bottom is forming. They said they now see revenue bottoming out and inventory reaching a peak in the first quarter of 2023, with top-line growth increasing as inventories decline later in the year. 

“A cyclical first quarter trough with structural improvement, driven by supply, Capex cuts and better 2H demand, positions Micron, Western Digital and Seagate for upside with shares 40-50% below prior cycle peaks,” analysts, led by Vijay Rakesh, said in a note late Thursday.

They raised their price target on memory chip maker Western Digital (WDC) to $50 from $38, and Micron to $72 from $48. Seagate’s (STX) price target was hiked to $82 from $62, as they noted the company has aggressively cut HDD production and reduced inventory by 25% in the December quarter. 

Western Digital stock has climbed 33% since the beginning of the year, Micron is up 20% and Seagate has risen 33%, as of Thursday’s close. All three moved around 1% higher in premarket trading Friday.

Write to Callum Keown at [email protected]