On Thursday, Mizuho maintained an Outperform rating on shares of Micron Technology (NASDAQ:MU) but cut the price target from $135 to $115. According to data from InvestingPro, Micron, a major player in the semiconductor industry with a market capitalization of $116.5 billion, is currently trading near its Fair Value.
This adjustment follows the release of Micron’s November quarter results, which were in line with expectations, with revenues of $8.71 billion and earnings per share (EPS) of $1.79.
However, the company’s forecast for the February quarter pointed to weaker-than-expected revenue of $7.9 billion, below the consensus estimate of $8.97 billion, due to persistent weakness in the PC and smartphone markets.
Despite the short-term challenges, InvestingPro analysis shows strong revenue growth of 61.6% over the past twelve months, with analysts forecasting continued sales growth this year. Access 12 additional exclusive InvestingPro Tips and comprehensive analysis through Pro Research.
Mizuho highlighted several key takeaways from Micron’s report, including a high-single-digit percentage increase in DRAM prices quarter-over-quarter and a low-single-digit percentage decline in NAND prices.
The company also noted Micron’s planned capital expenditures for fiscal 2025, estimated at around $14 billion, which will primarily fund High Bandwidth Memory (HBM) and greenfield projects, with NAND expected to account for about 20-25 % of the mix.
Additionally, the total addressable market (TAM) for HBM is expected to double to $30 billion by calendar year 2025, with Micron projecting a 20-25% market share, translating into billions of dollars in revenue from HBM in the fiscal year 2025.
Looking ahead, Mizuho expects Micron to achieve a significant increase in market share for HBM, rising to 20-25% in calendar year 2025 from around 5-7% currently. The analyst firm also noted that HBM is out of stock for fiscal 2025.
The company maintains a strong financial position with a current liquidity ratio of 2.64 and operates at a moderate debt-to-equity ratio of 0.31, according to data from InvestingPro, suggesting strong ability to fund its expansion plans .
These factors contribute to Mizuho’s continued positive outlook on Micron, despite reducing its price target to $115, which is approximately 1.9 times its estimated fiscal 2026 price-to-book ratio, consistent with its previous multiple by 2.0 times.
Micron’s report also included expectations for a mid-teens year-over-year percentage increase in bit DRAM and NAND demand for the year 2025. Additionally, data center memory supplies remain healthy, while equipment makers PC and smartphone original equipment manufacturers (OEMs) are experiencing pronounced corrections in the February quarter.
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