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Friday, Stifel analysts reiterated their Buy rating on Micron Technology (NASDAQ:MU) shares, maintaining a $130.00 price target. According to InvestingPro data, Micron has demonstrated strong momentum with a 22.4% year-to-date return and currently trades near its Fair Value, suggesting the stock is reasonably priced. The firm’s analysis followed Micron’s recently reported second-quarter results and third-quarter outlook, which surpassed concerns that were previously held by the market. Micron’s NAND bit shipments showed unexpected resilience in the second quarter, and the company anticipates an uptick in DRAM shipments for the third quarter. The company’s financial health appears solid, with InvestingPro data showing a healthy current ratio of 2.72 and revenue growth of nearly 80% in the last twelve months.
Micron’s sales of HBM DRAM and the industry’s total addressable market (TAM) for HBM continue to be revised upwards. Despite this positive performance, the analysts noted that Micron’s gross margin (GM) outlook for the fourth quarter, which is described as "somewhat higher," might underwhelm some market participants. However, Stifel believes that this forecast reflects short-term higher absorption costs in the NAND segment and likely leans towards a conservative estimate, considering the fourth quarter is still five months away.
The ongoing debate about the memory cycle, influenced by macroeconomic uncertainty, is expected to persist. Yet, Stifel’s analysts anticipate signs of recovery to become more evident. This expectation is based on tightly managed NAND supply and a stronger demand foundation for DRAM. Moreover, Micron is positioned to gain a larger share in high-value segments like HBM.
Stifel’s endorsement of Micron’s stock is rooted in these market dynamics and the company’s strategic positioning. The firm’s $130 price target is based on 12 times their projected earnings per share (EPS) for the 2026 calendar year.
In other recent news, Micron Technology Inc. reported its Q2 FY2025 earnings, which exceeded analyst expectations. The company achieved an earnings per share (EPS) of $1.56, surpassing the forecasted $1.44, while revenue reached $8.05 billion, outpacing the anticipated $7.91 billion. This strong financial performance was driven by a significant year-over-year increase of 47% in DRAM revenue, which constituted 76% of Micron’s total revenue. The company also announced new technological advancements, including the One Gamma DRAM. Furthermore, Micron anticipates record revenue in the upcoming quarter, projecting $8.8 billion in revenue for Q3 FY2025. Analysts have noted the company’s strategic focus on innovation and operational efficiency as key factors in its robust market position. Additionally, Micron is navigating potential risks such as supply chain disruptions and geopolitical tensions that could impact its global operations.
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