Baird, a financial services firm, changed its forecast on Micron Technology (NASDAQ:MU) on Thursday, reducing its price target to $130 from the previous $150, but maintaining an Outperform rating on the stock.
According to data from InvestingPro, Micron stock currently trades at $103.90, with a P/E ratio of 155.14, suggesting premium valuation levels. The revision reflects a more cautious stance due to further market weakening, particularly in the NAND sector, following a notable decline in demand in the summer months.
The Baird analyst pointed out that Micron’s forecasts point to a continued decline in macroeconomic trends. This is especially evident in the NAND market, which has seen recent downturns. Despite the current challenges, InvestingPro analysis shows strong revenue growth of 61.59% over the past twelve months, with analysts forecasting continued sales growth this year.
The expectation is that DRAM prices will continue to decline through mid-calendar year 2025, primarily due to weakness in the PC and mobile sectors, with a potential modest recovery in the second half of 2025.
Despite the downward trend in DRAM prices, Baird remains optimistic about Micron’s earnings potential. The company expects Micron’s High Bandwidth Memory (HBM) to contribute an annualized earnings per share (EPS) rate of $3 by the end of 2025, while InvestingPro expects an EPS of $9.11 for fiscal 2025.
The analyst highlighted the significant compound annual growth rate (CAGR) for HBM, reminiscent of the early days of NAND but with a higher gross margin profile. InvestingPro subscribers can access more than 12 additional key insights into Micron’s financial health and growth prospects through the comprehensive Pro Research Report.
In addition to the EPS forecast, the total addressable market (TAM) for HBM was raised for the 2025 calendar year. This suggests that despite current market challenges, Baird sees growth opportunities for Micron’s HBM products in the coming years.
The Outperform rating indicates that the Baird analyst believes that Micron stock will outperform the average return of the stocks analyzed by the company. The new price target of $130, while lower than before, still suggests a positive outlook for the company’s financial performance.
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.
