Needham, a financial services company, changed its outlook on Micron Technology (NASDAQ:MU) on Thursday, lowering the stock’s price target to $120 from the previous $140, while maintaining a Buy rating. The revision comes in response to Micron’s recent financial update, which included a modest earnings beat but offered lower-than-expected guidance due to weaker demand in consumer markets and data center solid-state drives (SSDs).
According to data from InvestingPro, Micron shares are currently trading at a P/E ratio of 155, with analyst targets ranging from $70 to $250, reflecting varying market views on the company’s prospects.
Micron Technology, a leading provider of memory and storage solutions with a market capitalization of $115.2 billion, is facing a period of inventory digestion in consumer markets, and this trend has now extended to data center SSDs. The weakness observed is predominantly in the NAND segment.
As a result, industry expectations for bit demand growth have been reduced for calendar years 2024 and 2025. Despite these challenges, InvestingPro analysis shows that analysts expect significant revenue growth of 52% for the fiscal year 2025, suggesting a potential recovery ahead. Subscribers can access 12 additional ProTips and comprehensive financial metrics for more detailed insights.
In light of these market conditions, Micron has decided to reduce its capital expenditures (CapEx) for NAND production. The company also expects gross margins (GM) to be impacted in the fiscal second and third quarters due to challenges in the NAND business.
Despite these headwinds, the high-bandwidth memory (HBM) and data center DRAM segments are expected to remain robust, potentially mitigating some of the negative effects of weaker NAND performance.
Needham’s revised price target of $120 is based on a multiple of 2.1 times Micron’s estimated first-quarter fiscal 2027 tangible book value per share. The company’s analyst said: “We have lowered our PT to $120, based on a multiple of 2.1x our estimated tangible book value per share for F1Q27.” This adjustment reflects the near-term challenges faced by the company, while recognizing potential strengths in some areas of its product line.
In other recent news, Micron Technology has been the subject of several analyst reviews following its recent earnings report. Bernstein maintained an Outperform rating on Micron, highlighting the company’s progress with High Bandwidth Memory (HBM), where revenue more than doubled quarter-over-quarter.
Micron management raised its Total Addressable Market (TAM) estimate for HBM to over $30 billion by 2025. However, Micron’s guidance for the fiscal second quarter fell short of expectations due to a slowdown in drives enterprise solid state drive (eSSD), leading to a 9% decline in quarter-over-quarter revenue.
JPMorgan revised its price target for Micron to $145 from $180, while maintaining an Overweight rating. The company noted robust DRAM bit shipments and a significant improvement in DRAM pricing, which offset weaker NAND bit shipments and pricing.
Despite a lower revenue outlook for the next quarter, Micron’s gross margin is expected to decline by only 100 basis points quarter-over-quarter, suggesting continued increases in DRAM prices.
Wolfe Research and Stifel also adjusted their price targets for Micron to $175 and $130, respectively, with both companies maintaining a positive outlook. They noted the robust narrative for Micron’s DRAM and HBM’s impact on the company’s earnings. Raymond James, while reducing its price target to $120, maintained an Outperform rating, highlighting HBM’s potential as a significant growth driver.
These recent developments indicate a mixed but optimistic outlook for Micron’s future, with a strong emphasis on the growth potential of HBM and the stability of server DRAM.
This article was generated and translated with the support of artificial intelligence and reviewed by an editor. For further information, please see our T&Cs.
