KeyBanc maintained an Overweight rating on shares of Micron Technology (NASDAQ:MU) on Thursday with a stable price target of $135.00, despite the company’s forecast for the fiscal second quarter falling short of expectations. According to data from InvestingPro, Micron, currently trading at $103.90, appears slightly undervalued based on its Fair Value rating.
The company’s analyst highlighted Micron’s fiscal first quarter performance as in line with forecasts, supported by a 20% quarter-over-quarter increase in data center growth and DRAM revenue, as well as a doubling of High Memory revenue. Bandwidth (HBM). The company’s strong execution is reflected in its impressive revenue growth of 61.59% year-over-year, with total revenues reaching $25.11 billion in the trailing twelve months.
The less optimistic outlook for the fiscal second quarter has been linked to several factors, including a temporary decline in demand for data center Solid State Drives (SSDs), slower-than-expected inventory turnover in the consumer sector, particularly for PCs and smartphones, and an oversupply of NAND memory in the industry.
Despite the subdued forecast for the fiscal second quarter, KeyBanc expressed optimism about Micron’s progress, particularly in developing and enhancing HBM3e technology. The company also highlighted long-term industry tailwinds that could benefit Micron, such as increased content growth and developments in artificial intelligence.
InvestingPro’s analysis reveals multiple positive indicators, including expected net income growth and sales expansion for the current year. Subscribers can access 12 additional exclusive ProTips and comprehensive evaluation metrics for more detailed insights.
KeyBanc’s stance on Micron remains positive, with expectations that the company will overcome the current difficulties. The company’s analyst reaffirmed confidence in Micron’s strategic progress and the industry’s future growth potential to support the company’s performance.
With a market capitalization of $115.2 billion and a solid financial health score from InvestingPro, Micron maintains its position as a major player in the semiconductor industry.
In other recent news, Micron Technology has undergone several financial adjustments following its recent earnings report and forecast. Needham maintained a Buy rating on Micron, but cut the stock’s price target to $120, citing a modest earnings beat and weaker demand in the consumer and data center SSD markets.
Other firms, including JPMorgan, Wolfe Research and Stifel, also adjusted their price targets for Micron to $145, $175 and $130, respectively, maintaining positive ratings despite the company’s forecast for the fiscal second quarter falling short of expectations .
Analysts at these companies highlighted Micron’s robust DRAM bit shipments and significant improvement in DRAM prices, which offset weaker NAND bit shipments and prices. Micron’s High Bandwidth Memory (HBM) revenues more than doubled quarter-over-quarter, leading to an increase in HBM’s Total Addressable Market (TAM) estimate to over $30 billion by 2025.
In response to current market conditions, Micron has decided to reduce capital expenditures for NAND production, expecting an impact on gross margins in the fiscal second and third quarters due to challenges in the NAND industry.
Despite these headwinds, the company’s data center DRAM segments are expected to remain robust. These recent developments reflect a mixed but generally optimistic outlook for Micron’s future, with a strong emphasis on the growth potential of HBM and the stability of server DRAM.
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