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On Monday, Citi analysts maintained their Buy rating on Micron Technology (NASDAQ:MU) shares with a price target of $150.00. The stock, currently trading at $100.79, has shown strong momentum with a 19.76% gain year-to-date. According to InvestingPro analysis, Micron is trading near its Fair Value, with several positive indicators including a notably low PEG ratio of 0.19. In a recent note, the analysts forecasted that Micron will unveil its second-quarter fiscal year 2025 (F2Q25) results on March 20, after the market closes. They anticipate the company will deliver satisfactory results but expect the guidance to fall short of consensus estimates. The anticipated weaker guidance is attributed to a less favorable consumer mix and underutilization charges related to NAND, which accounted for 26% of first-quarter fiscal year 2025 (F1Q25) sales. InvestingPro data shows impressive revenue growth of 79.8% over the last twelve months, with analysts expecting continued growth this year.
Despite these concerns, Citi analysts observed a positive trend in mainstream DDR5 spot pricing, which has seen a nearly 8% increase year-to-date, marking the most significant rise since the first quarter of 2024 (1Q24). This uptick in pricing is seen as a sign that DRAM pricing could start to improve from the second quarter of 2025 (2Q25) onwards.
The analysts’ optimism about Micron’s prospects is further bolstered by the company’s opportunities in AI High Bandwidth (NASDAQ:BAND) Memory (HBM) and a favorable outlook on the DRAM recovery. This positive view is based on supply and demand dynamics projected for the calendar year 2025 (C25). Citi’s earnings per share (EPS) estimate for Micron’s fiscal year 2026 (F26) stands at 39% above the consensus, reinforcing their confidence in the company’s performance.
In summary, Citi analysts reiterated their Buy rating on Micron Technology shares and upheld their $150 price target, signaling a continued positive stance on the stock’s future amidst the expected DRAM market recovery.
In other recent news, Broadcom (NASDAQ:AVGO) reported a strong first-quarter performance, with adjusted earnings per share of $1.60, surpassing the Bloomberg Consensus estimate of $1.50. The company’s adjusted net revenue reached $14.92 billion, exceeding the forecasted $14.61 billion, and it anticipates second-quarter revenue of approximately $14.9 billion, which is higher than the estimated $14.59 billion. Meanwhile, Tokyo Electron Limited (TEL) is positioned to benefit significantly from the growing NAND wafer-to-wafer hybrid bonding market, with its revenue from bonders having doubled year-over-year. TEL holds over 20% market share in W2W bonders and is expected to see further revenue growth as the NAND bonding market is projected to expand from ¥100 billion in 2025 to ¥300 billion in 2030.
Micron Technology has been the focus of recent analyst updates, with Raymond (NSE:RYMD) James maintaining an Outperform rating and a $120 price target, despite a forecasted decline in fiscal third-quarter gross margins. The company attributes this decline to a shift towards consumer-oriented products and weaker pricing trends in the DDR4 and NAND markets. Citi analysts also maintained a Buy rating for Micron with a $150 price target, despite reducing their gross margin estimate for the fiscal third quarter. Both firms remain optimistic about Micron’s potential, particularly in AI High Bandwidth Memory and a possible recovery in the DRAM market.
Micron’s management confirmed that inventory levels for PCs and smartphones are expected to normalize by spring, and they are on track with their HBM roadmap. However, the company’s recent announcement of declining gross margins for the May-ending quarter has raised investor concerns, overshadowing its revenue growth forecast for the third quarter. The anticipated margin contraction is due to a mix shift towards consumer products and underutilization of NAND production capabilities. This has led to a negative market response, reflecting concerns over Micron’s near-term financial performance.
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