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Micron Technology (NASDAQ:MU) had its price target adjusted by Mizuho, following the company's report of a robust August quarter and a positive outlook for the November quarter. The price target was lowered to $135 from the previous $145, despite the firm maintaining an Outperform rating on the stock.
Micron reported impressive revenue and earnings per share (EPS) for the August quarter, with figures at $7.75 billion and $1.18 respectively. The company also provided a November quarter revenue guidance of $8.70 billion, surpassing the consensus estimate of $8.36 billion. This forecast is seen as better than expected, especially considering concerns over lower than anticipated High Bandwidth (NASDAQ:BAND) Memory (HBM) yields.
The financial institution highlighted several key points from Micron's report, including an increase in AugQ DRAM/NAND pricing, a raised Fiscal Year 2025 capital expenditure to mid-30% range of revenue from the prior 30%, and projections for HBM revenues to reach "multiple $Bs." The total addressable market (TAM) for HBM is expected to grow over eightfold to $25 billion by Calendar Year 2025.
Additionally, the demand for DRAM/NAND bits in 2025 is anticipated to increase at a mid-double-digit percentage year-over-year. Data center memory inventories are improving, and original equipment manufacturers (OEMs) for PCs and smartphones are projected to experience better growth in 2025.
Mizuho's analysis suggests that Micron is well-positioned for future growth, with its HBM market share expected to ramp up to approximately 25% in Calendar Year 2025 from the current 5-7%. Moreover, HBM sales are already sold out for 2024 and 2025, with pricing established. The adjustment in Micron's price target to $135 from $145 reflects a more cautious view on memory and semiconductor sector (SOX) multiples.
In other recent news, Micron Technology has been the focus of several analyst firms following its strong earnings and revenue results. Goldman Sachs maintained a Buy rating on Micron, setting a price target of $145, while UBS reaffirmed its Buy rating and kept its price target steady at $135. TD Cowen raised its price target for Micron to $135, and Piper Sandler reiterated an Overweight rating with a $150 price target. These updates reflect Micron's impressive financial performance and promising future prospects.
Micron's recent earnings and revenue results have surpassed expectations, largely due to robust demand for its AI-related memory chips. This has led to the company's highest quarterly revenue growth in over a decade. Micron has also announced plans to expand its manufacturing footprint with new facilities in Idaho, India, and China, positioning itself to meet strong demand from data centers.
Analysts anticipate that fluctuations in inventory levels for PCs and smartphones are temporary and that the demand for High Bandwidth Memory (HBM) will rise due to robust demand for Graphics Processing Units (GPUs) in the coming years. Micron's growth in other memory sectors is estimated at around 4-5% year-over-year for the next two years.
InvestingPro Insights
As Micron Technology (NASDAQ:MU) navigates a dynamic semiconductor landscape, real-time data from InvestingPro adds further context to the company's financial health and market position. Micron has been recognized for its consistent dividend growth, having raised its dividend for three consecutive years, signaling confidence in its financial stability. Analysts also anticipate sales growth in the current year, supporting the positive outlook provided by Micron for the November quarter.
InvestingPro data reveals a current market capitalization of $105.78 billion, reflecting the company's significant presence in the industry. Despite a negative P/E ratio of -68.02, analysts predict Micron will return to profitability this year, which could indicate potential for a rebound in valuation metrics. Furthermore, a strong revenue growth of 61.59% in the last twelve months as of Q4 2024 underscores the company's robust performance amidst industry challenges.
While Micron operates with a moderate level of debt and its liquid assets exceed short-term obligations, it is important to note that the company has faced weak gross profit margins of 22.35% in the same period. This is a critical area for potential investors to monitor, especially in the context of the semiconductor industry's cyclical nature and pricing pressures.
For readers interested in a deeper analysis, there are additional InvestingPro Tips available, offering comprehensive insights into Micron's financials, market trends, and projections. Visit InvestingPro for a total of 9 tips that can further inform your investment decisions regarding Micron Technology.
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