Citi maintains Micron stock Buy rating with $150 target

On Wednesday, Citi analysts maintained a Buy rating for Micron Technology (NASDAQ:MU) shares, with a price target of $150.00. According to InvestingPro data, analysts broadly share this bullish sentiment, with a strong consensus recommendation of 1.54 (where 1 is Strong Buy). The company, currently valued at over $102 billion, has demonstrated robust revenue growth of nearly 80% over the last twelve months. The analysts adjusted their forecast for Micron’s fiscal third quarter of 2025, reducing the gross margin estimate from 40.0% to 35.0%. This revision follows Micron’s announcement at a competitor’s conference that its May quarter gross margin is expected to decline by several hundred basis points sequentially, falling short of Citi’s initial projection of a slight increase. For context, InvestingPro data shows the company’s current gross profit margin stands at 30.92%, with multiple ProTips indicating positive growth prospects ahead.

Micron attributed the anticipated decline in gross margin to a mix shift towards consumer DRAM and challenges related to NAND underutilization charges and NAND pricing weakness. Despite this setback, Citi’s analysts remain positive about Micron’s prospects. They cited the company’s opportunities in AI High Bandwidth (NASDAQ:BAND) Memory (HBM) and their expectation for a recovery in the DRAM market during the spring as reasons for their optimism. The company’s strong financial position is evidenced by its healthy current ratio of 2.72 and moderate debt levels, with total debt to capital ratio at just 0.12.

The analysts’ report indicates that while the lower margin guidance is a disappointment, it does not dampen their confidence in the stock’s potential. They emphasize that the reiteration of the Buy rating is a reflection of their continued belief in Micron’s strengths and future market recovery.

Micron Technology, a leading provider of semiconductor solutions, is navigating a challenging market environment. The company’s performance is closely watched by investors, as it is a significant player in the technology sector, particularly in the memory market where DRAM and NAND products are critical components. Based on InvestingPro’s comprehensive analysis, including over 30 key metrics and multiple ProTips, Micron appears undervalued at current levels, suggesting potential upside for investors. Get the full picture with InvestingPro’s detailed research report, available along with real-time analytics and expert insights.

Citi’s analysts have adjusted their expectations in light of the new information provided by Micron but have not changed their long-term view on the company’s stock. They continue to recommend Micron Technology as a Buy, signaling confidence in the company’s ability to navigate the current headwinds and capitalize on future market opportunities.

In other recent news, Micron Technology’s CFO, Mark Murphy, announced at the Wolfe Research Auto, Auto Tech, and Semiconductor Conference Fireside Chat that the company’s fiscal third-quarter gross margins are expected to decline, despite maintaining second-quarter guidance and forecasting revenue growth for the third quarter. This news has raised concerns among investors as the company warned that gross margins for the May-ending quarter would decrease by several hundred basis points quarter-over-quarter. The anticipated margin contraction is attributed to a mix shift towards consumer products, which typically carry lower pricing, and underutilization of NAND production capabilities.

In other developments, SK Hynix, as noted by Stifel analysts, plans to increase capital expenditure (capex) in 2025, following a substantial increase in 2024. The additional spending will be directed towards high bandwidth memory (HBM) and fabrication infrastructure in Korea. Despite the anticipated increase, the company intends to limit the year-over-year rise in capex.

Furthermore, Micron Technology completed a $1 billion senior note offering with a 5.80% interest rate due in 2035. The notes were issued under an existing indenture agreement with U.S. Bank Trust Company, National Association, as trustee. The net proceeds from the note offering will be used to redeem its outstanding 4.975% Senior Notes due 2026 and for general corporate purposes, which may include repaying other debts.

Lastly, UBS analyst Timothy Arcuri reiterated a Buy rating on Micron Technology shares, maintaining a price target of $125.00. Despite near-term inventory challenges, Arcuri predicts a return to modest undersupply in the DRAM market by the fourth quarter of 2025 and into calendar year 2026. The firm has established a leading position in technology, and the progression of its HBM technology is expected to tighten the market once more.

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