On Thursday, Goldman Sachs maintained a Buy rating on Micron Technology shares (NASDAQ:MU) and increased the price target to $158 from the previous $138. The adjustment comes despite Micron's stock falling 8% in after-hours trading. The company's fiscal third-quarter results, reported for May, surpassed Wall Street consensus, but its fourth-quarter outlook for August did not meet the expectations of the buy side.
Micron's year-to-date performance has been notable, with a 67% increase compared to the SOX/SPX indices, which saw a 31% and 15% rise, respectively. The analyst from Goldman Sachs views the recent drop in Micron's share price as an opportunity to strengthen positions in the stock. The firm's optimistic stance is based on several factors, including anticipated growth in AI compute, market share gains in the High-Bandwidth Memory market, and supply-side discipline among Micron and its industry peers.
The revised price target of $158 implies a 21% potential upside from Micron's after-hours trading price of $131. The analyst expects these factors to contribute to positive earnings per share revisions through the end of the 2024 calendar year and into 2025.
Goldman Sachs' position reflects confidence in Micron's long-term prospects, especially with the expansion of AI compute capabilities and the company's strategic moves in the memory market. The firm has reiterated its Buy rating based on these growth drivers and the potential for continued earnings improvement.
In other recent news, Micron Technology has been a topic of significant discussion among analysts. JPMorgan maintained its Overweight rating on the company, raising the price target to $180, primarily due to Micron's impressive results for the May quarter and a strong earnings outlook for the August quarter. Similarly, Baird reaffirmed its Outperform rating on Micron, with a price target of $172, highlighting the company's increased capital expenditures for High Bandwidth (NASDAQ:BAND) Memory (HBM) development, expected to meet the booming AI demand. However, Aletheia Capital downgraded Micron's stock from Buy to Hold due to concerns over Micron's High Bandwidth Memory 3E (HBM3E).
Micron Technology recently exceeded revenue estimates for its third quarter, reporting a revenue of $6.81 billion. This surge is attributed to increased demand for memory chips from the AI industry. The company also announced a raised capital expenditure forecast for fiscal year 2024 to $8 billion, which includes greenfield fabs in Idaho and New York.
In other developments, Entegris (NASDAQ:ENTG), a supplier for the chip manufacturing industry, secured a preliminary agreement for a grant of up to $75 million from the Biden administration to develop a new facility in Colorado Springs. This grant is part of the Chips and Science Act initiative, aimed at increasing domestic chip production and reducing reliance on foreign plants. Micron Technology anticipates receiving $6.1 billion in grants from the U.S. CHIPS Act, which aims to strengthen the domestic semiconductor industry.
InvestingPro Insights
Goldman Sachs' optimistic outlook on Micron Technology (NASDAQ:MU) aligns with several positive indicators from InvestingPro data. Notably, Micron has seen a strong return over the last year, with a 114.4% price total return, and a significant six-month price total return of 64.65%. Additionally, analysts' revisions suggest confidence in the company's near-term performance, with 10 analysts having revised their earnings upwards for the upcoming period. This is particularly relevant as Micron's stock seeks recovery from its recent after-hours trading dip.
InvestingPro Tips highlight that Micron has raised its dividend for three consecutive years, signaling a commitment to shareholder returns despite a challenging market environment. Furthermore, the company is anticipated to return to profitability this year, which may reassure investors looking for sustainable financial health. For those seeking a deeper dive into Micron's financials and future prospects, InvestingPro offers additional tips and a comprehensive analysis at: https://www.investing.com/pro/MU. Investors can access these insights and more with an exclusive 10% discount on a yearly or biyearly Pro and Pro+ subscription using the coupon code PRONEWS24.
With a market capitalization of $156.27 billion and a forward-looking sentiment, Micron is positioned as a prominent player in the Semiconductors & Semiconductor Equipment industry. The company's strategic moves and market dynamics present a compelling case for investors, as reflected in Goldman Sachs' revised price target. The InvestingPro platform lists a total of 15 additional tips for Micron, providing a robust resource for investors to make informed decisions.
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