Micron Stock Rises on Analyst Optimism Ahead of Earnings
Investing.com -- Micron Technology (NASDAQ: MU) shares rose 8% on Monday in response to positive comments from industry analysts ahead of the company's first-quarter earnings report.
JPMorgan analyst Harlan Sur reiterated an Overweight rating and a price target of $180.00 for Micron, highlighting the potential for an increase in revenue and earnings per share due to a favorable product mix and strong shipments, particularly for high-bandwidth memory products.
Sur's analysis predicts that Micron's earnings, set to be announced after the market close on Wednesday, are likely to exceed consensus expectations. This projection relies on better-mixed DRAM pricing, driven by strong shipments of Nvidia’s H200 platform and a rebound in server demand. These factors are expected to offset weaker segments such as PCs, smartphones, and consumer markets.
However, the outlook for the second quarter is mixed; JPMorgan anticipates that revenues, gross margin, and earnings per share will be directed below consensus due to ongoing challenges in traditional DRAM pricing. This situation could be partially balanced by Micron's transition to higher-margin HBM (High Bandwidth Memory) products, where it has gained market share on key Nvidia platforms.
Despite these short-term challenges, second-quarter gross margins are expected to remain stable or slightly improve quarter-over-quarter due to Micron's implementation of cost reductions and a more significant role for HBM in its revenue mix.
“MU shares have fallen about 35% since the June peak (versus a 13% decline in the SOX), suggesting that bearish sentiment is somewhat priced in, and we believe the stock should begin to outperform in early/mid-2025 as the market starts to discount a more meaningful recovery in memory pricing for the latter part of the 2025 calendar year,” Sur wrote in a note.
Citi analyst Christopher Danely also reiterated a Buy rating and a price target of $150.00 for Micron, forecasting that the first-quarter results and guidance will be slightly below consensus due to the previous DRAM weakness. Danely remains optimistic about the DRAM recovery, pointing out positive supply/demand dynamics for the 2025 calendar year.
Both analysts agree that despite the current challenges, Micron's strong position in enterprise SSDs and robust demand from data centers are likely to contribute to a recovery in memory pricing and company performance in the second half of 2025.