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On Thursday, Citi analysts adjusted their outlook on Micron Technology (NASDAQ:MU) shares, reducing the price target to $120 from the previous $150 while sustaining a Buy rating on the stock. The revision followed Micron’s financial results released after the market closed on Wednesday, which showed satisfactory performance and a forecast that exceeded market consensus, propelled by a rise in DRAM sales. Currently trading at $103, Micron has demonstrated strong momentum with a 22% gain year-to-date, supported by robust financial health metrics according to InvestingPro data.
Despite Micron’s margins falling short of expectations, with current gross profit margins at 31%, Citi analysts remain optimistic about the company’s future. They anticipate an improvement in DRAM pricing starting from the second quarter of 2025, which is expected to contribute to a recovery in the DRAM market. This market rebound is predicted based on supply and demand dynamics anticipated for the calendar year 2025 and an increase in High Bandwidth (NASDAQ:BAND) Memory (HBM) revenue. InvestingPro analysis reveals impressive revenue growth of nearly 80% in the last twelve months, with analysts expecting continued growth this year.
The analysts have increased their earnings estimates for Micron, reaffirming their Buy rating. However, they also expressed caution, noting that Micron’s gross margins might not reach the heights seen in previous market upturns. This caution has led to a lower projected price target, reflecting a more conservative valuation multiple.
The report from Citi comes as Micron navigates through the competitive semiconductor industry, where pricing and demand for memory chips are key factors influencing company performance. Micron’s latest guidance, which suggests a positive trend in DRAM sales, provides a basis for the analysts’ continued endorsement of the stock despite the adjustment in the price target.
In other recent news, Micron Technology reported its Q2 FY2025 earnings, surpassing analyst expectations with an earnings per share (EPS) of $1.56 compared to the forecasted $1.44. The company’s revenue reached $8.05 billion, exceeding the anticipated $7.91 billion. This strong performance was driven by a 47% year-over-year increase in DRAM revenue, which accounted for 76% of Micron’s total revenue. Looking ahead, Micron projects a record revenue of $8.8 billion for Q3 FY2025, supported by continued demand in data centers and AI-related memory markets.
Stifel analysts maintained a Buy rating on Micron’s stock with a price target of $130, following the company’s strong second-quarter results and optimistic third-quarter outlook. They noted the resilience in Micron’s NAND bit shipments and anticipate an increase in DRAM shipments. Despite some concerns over Micron’s gross margin outlook for the fourth quarter, Stifel believes the forecast reflects short-term higher absorption costs in the NAND segment.
Micron’s strategic initiatives, including advancements in One Gamma DRAM technology, are expected to support its growth trajectory. The company is also focused on expanding its market share in high-value segments like HBM (high-bandwidth memory), with ongoing efforts to manage NAND supply tightly. Micron’s position in the competitive landscape is further reinforced by its innovative product launches and facility expansions, aiming to capitalize on the transformative growth driven by AI.
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