Intel stock spikes after report of possible US government stake
On Monday, CFRA, a notable financial research firm, adjusted its outlook on Micron Technology (NASDAQ:MU), reducing the stock's price target from $170 to $140 while maintaining a Buy rating on the shares. The firm's analyst cited a revised earnings per share (EPS) forecast and the transition of the memory sector into an expansionary phase as the primary reasons for the adjustment.
The new 12-month price target is based on a price-to-earnings (P/E) ratio of 10 times the firm's calendar year 2026 (ending in August) EPS estimate of $14. This valuation represents a more conservative stance compared to historical levels. The firm has also revised its fiscal year 2025 EPS estimate to $8.79 from $9.30 and for fiscal year 2026 to $13.36 from $14.26.
As Micron prepares to report its August-quarter results after the market closes on September 25, CFRA anticipates an EPS of $1.11 on revenues of $7.6 billion, which would indicate a year-over-year growth of over 90%. Additionally, the firm expects a gross margin of 34.5% for the same period. Looking ahead to the November quarter, the firm forecasts revenue of $8.3 billion, a 75% increase year-over-year, on an EPS of $1.56.
The analyst acknowledged the current headwinds facing Micron, including concerns about memory demand and inventory buildup in consumer-driven markets such as PCs and smartphones. Micron's shares have fallen more than 40% from their peak levels this summer, reflecting these concerns.
Despite these challenges, CFRA believes that Micron's long-term growth potential, particularly in high-bandwidth memory—which requires three times the wafer supply compared to DDR5—will drive record revenue and profits for the company.
However, the firm suggests that investors may remain cautious as they assess cyclical factors and planned capital expenditures in memory production for calendar year 2025.
In other recent news, Micron Technology has been the subject of several financial firms' analysis, with Rosenblatt Securities maintaining a Buy rating and a steady price target of $225.00. This rating is backed by the firm's anticipation of Micron's August quarter results aligning with predictions, despite possible residual inventory issues in non-AI PC and smartphone segments.
Meanwhile, TD Cowen held a Buy rating but reduced the price target from $160.00 to $115.00, citing stable long-term fundamentals amidst current market uncertainties.
Stifel also maintained a Buy rating, adjusting its price target to $135 from $165, while Citi reduced its price target for Micron to $150, anticipating below-consensus results for Q4 due to DRAM weakness. Despite these adjustments, these firms expect improvements in Micron's revenue and gross margins in the upcoming quarters.
In product development news, Micron has launched its Crucial P310 2280 Gen4 NVMe solid-state drive (SSD), promising double the performance of Gen3 SSDs and a 40% speed increase over its predecessor. This new SSD targets a wide consumer base, including gamers, students, and creative professionals, offering high-speed boot and application load times at a competitive price.
InvestingPro Insights
In light of CFRA's recent outlook adjustment on Micron Technology (NASDAQ:MU), it's beneficial to consider additional financial metrics and analyst insights from InvestingPro. According to InvestingPro data, Micron Technology boasts a market capitalization of $103.52 billion, indicating its significant presence in the semiconductor industry. Despite the current negative P/E ratio of -66.61, reflecting the challenges faced in recent quarters, analysts predict a turnaround with the company expected to become profitable this year. This aligns with CFRA's long-term growth outlook for Micron.
InvestingPro Tips suggest that Micron has consistently raised its dividend for the past three years, showcasing a commitment to returning value to shareholders even through volatile market conditions. Moreover, analysts anticipate sales growth in the current year, which may signal the beginning of a recovery phase for the company. This is particularly relevant as CFRA highlights the transition of the memory sector into an expansionary phase.
Investors may also find comfort in Micron's liquidity position, as its liquid assets exceed short-term obligations, and the company operates with a moderate level of debt. These factors could contribute to Micron's resilience and ability to navigate through industry headwinds.
For those seeking a deeper dive into Micron's financial health and future prospects, InvestingPro offers additional tips and a comprehensive analysis. There are 9 more InvestingPro Tips available for Micron Technology, providing investors with a more nuanced understanding of the company's performance and potential (https://www.investing.com/pro/MU).
In conclusion, while CFRA has adjusted its price target and EPS forecasts for Micron Technology, the InvestingPro insights provide a broader perspective on the company's financial health and industry position, which could be instrumental for investors making informed decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.