Two 59%+ winners, four above 25% in Aug – How this AI model keeps picking winners
On Wednesday, Raymond (NSE:RYMD) James reaffirmed their positive outlook on Micron Technology (NASDAQ:MU) shares, maintaining an Outperform rating and a $120.00 price target. According to InvestingPro data, Micron, a prominent player in the semiconductor industry, currently trades at $91.68 with a market capitalization of $102 billion. The stock has shown resilience with an 11.8% gain year-to-date, and InvestingPro analysis suggests the stock is currently undervalued. The research firm adjusted their financial model for Micron following comments from the company’s management at an investor conference held earlier today. Micron’s management anticipates a decline in fiscal third-quarter gross margins by several hundred basis points sequentially, attributing this to a shift towards a more consumer-oriented product mix. Additionally, the company noted weaker pricing trends in the DDR4 and NAND markets.
Despite these challenges, Micron’s management remains optimistic about the future, expecting gross margins to improve after the third fiscal quarter. They also reiterated their previous expectation that inventory levels for PCs and smartphones will normalize by spring. This optimism is supported by InvestingPro data showing strong financial health metrics, including a healthy current ratio of 2.72 and moderate debt levels, with total debt to capital at just 12%. Raymond James’ positive stance on Micron is largely based on the potential of High Bandwidth (NASDAQ:BAND) Memory (HBM), which they believe could be the most significant secular story in the industry and potentially extend the upcycle into calendar year 2026.
Micron’s management confirmed that the HBM roadmap is progressing as planned, with a 12-high product set to ramp up soon. They also reaffirmed their goal of achieving HBM market share comparable to their broader DRAM share in the second half of 2025. In light of the recent company updates, Raymond James has revised their fiscal third-quarter gross margin estimate from 38% to 35.4%, and their fiscal year 2025 earnings per share (EPS) forecast from $7.07 to $6.54, with the fiscal year 2026 estimate adjusted from $10.32 to $9.52.
Despite the near-term headwinds, Raymond James believes that the risk/reward profile for Micron Technology is attractive at 2.2 times the price-to-book (P/B) ratio and has reiterated their Outperform rating on the stock. InvestingPro analysis reveals additional positive indicators, including a low PEG ratio of 0.17 and projected sales growth of 40% for fiscal 2025. Subscribers to InvestingPro can access over 30 additional financial metrics and insights, including a comprehensive Pro Research Report that provides deep-dive analysis of Micron’s financial health and growth prospects.
In other recent news, Micron Technology has been in the spotlight due to several recent developments. Analysts at Citi maintained a Buy rating for Micron Technology, despite reducing the gross margin estimate for the company’s fiscal third quarter of 2025 from 40.0% to 35.0%. This revision followed Micron’s announcement of an expected decline in its May quarter gross margin due to a shift towards consumer DRAM and challenges related to NAND underutilization charges and NAND pricing weakness.
In another development, Micron Technology completed a $1 billion senior note offering. The notes, which carry a 5.80% interest rate, are due in 2035. The net proceeds from the note offering will be used to redeem the company’s outstanding 4.975% Senior Notes due 2026 and for general corporate purposes, including potentially repaying other debts.
Meanwhile, semiconductor company SK Hynix has plans to increase its capital expenditure (capex) in 2025, as noted by Stifel analysts. This follows a substantial increase in 2024, with the additional spending to be directed towards high bandwidth memory (HBM) and fabrication infrastructure in Korea.
Lastly, Micron Technology has warned that a cybersecurity investigation by the Chinese government could impact a significant portion of its sales in China. This comes as China begins an investigation into US chip grants and alleged dumping, targeting whether the US is unlawfully subsidizing its chipmakers and undercutting Chinese products. These are the recent developments in the semiconductor sector.
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