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On Monday, TD Cowen reiterated a Buy rating with a $125.00 price target for Micron Technology stock (NASDAQ:MU), which currently trades at $102.34. The stock has shown remarkable momentum with a 15.74% gain over the past week. The firm’s analyst expressed a cautious yet optimistic stance, noting signs of an improved outlook in the memory chip sector. Specifically, there are indications that DRAM and NAND suppliers are collectively pushing for price increases. Despite these positive signs, the analyst highlighted potential concerns over the sustainability of this trend, given the current weakness in end-demand.According to InvestingPro analysis, Micron is currently trading near its Fair Value, with multiple positive indicators including strong financial health and attractive valuation metrics relative to growth potential.
The firm’s caution is influenced by the broader economic context, suggesting that while the near-term may look promising for Micron Technology, the long-term preference is for exposure to semiconductor capital equipment companies like LRCX, which are considered to have lower downside risks amidst macroeconomic uncertainty. However, InvestingPro data reveals Micron maintains a strong financial position with a healthy current ratio of 2.72 and operates with moderate debt levels, potentially providing some downside protection.
TD Cowen has decided to maintain its earnings per share (EPS) estimate for Micron Technology at $1.35 for the May quarter, aligning with the view that it is premature to adjust estimates higher despite more positive recent checks compared to a few months ago. InvestingPro forecasts suggest strong earnings potential, with FY2025 EPS projected at $7.28 and revenue growth expected to reach 40%. The analyst pointed out that consistent efforts by DRAM and NAND suppliers to drive price increases could potentially lead to an EPS outlook for Micron Technology that surpasses both TD Cowen’s and Street’s expectations for calendar year 2026, with the Street’s estimate at $11.60 and TD Cowen’s at $8.00.
The firm underlined the importance of a demand recovery to realize these potential gains and advocated for prudence in estimate revisions. As it stands, TD Cowen sees only a small upside to its $1.35 EPS estimate for the May quarter, which is lower than the Street’s consensus of $1.55. With Micron’s market capitalization now at $114 billion and a solid financial health score of 2.52 (GOOD) according to InvestingPro metrics, the company appears well-positioned to navigate the current market environment.
In other recent news, Micron Technology has been the focus of analyst discussions due to its projected earnings and market opportunities. Citi analysts have maintained a Buy rating on Micron, setting a price target of $150. They expect the company to report its second-quarter fiscal year 2025 results in March, but anticipate that guidance may fall short of consensus estimates due to consumer mix shifts and underutilization charges related to NAND. Despite these concerns, Citi analysts are optimistic about Micron’s prospects in AI High Bandwidth (NASDAQ:BAND) Memory (HBM) and DRAM market recovery.
Raymond (NSE:RYMD) James also reaffirmed their positive outlook on Micron, maintaining an Outperform rating with a $120 price target. The firm adjusted their financial model following management’s comments at a recent investor conference, noting expected declines in gross margins due to a consumer-oriented product mix and weaker DDR4 and NAND pricing trends. However, they remain hopeful about Micron’s future, particularly the potential of HBM to drive growth.
In the broader chip market, Nvidia (NASDAQ:NVDA) is seeing premarket gains, influenced by Broadcom (NASDAQ:AVGO)’s optimistic forecast for AI chip production. Broadcom reported better-than-expected first-quarter earnings, with adjusted EPS of $1.60 and net revenue of $14.92 billion, surpassing estimates. The company forecasts second-quarter revenue of about $14.9 billion, also above expectations. This positive sentiment has had a ripple effect, with other chip stocks like Marvell (NASDAQ:MRVL) and Micron experiencing gains as well.
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