Top analysts revisit Micron stock price targets ahead of first-quarter earnings

Micron Technology shares were higher in early trading Monday after one of Wall Street’s top analysts issued bullish comments on the memory chip market ahead of its quarterly earnings report later this week.

Micron (mu) This year, the company has lagged the Nasdaq, which has gained about 24% compared with the benchmark index’s 32.7% gain, as the technology group’s DRAM memory chips, which account for about a third of its total revenue, have (a key component of consumer technology products) market pricing remains sluggish.

Investors, however, are betting on Micron’s newfound position in the market for so-called HBM (high-bandwidth memory) chips that improve the performance and reduce power consumption of artificial intelligence systems.

These chips (including the new HBM3E iteration) are now built into Nvidia’s chips (NVDA) The H200 processor and its newly developed Blackwell system make Micron one of the few global companies capable of competing in this rapidly growing market.

Earlier this month, the U.S. government’s CHIPS and Science Act provided $6.1 billion in support to support Micron Technology’s plan to invest approximately $125 billion in new production facilities in New York and Idaho.

“Leading memory chips are the foundation of all advanced technologies, and the United States is rebuilding its ability to produce these critical capabilities for the first time in nearly two decades,” said U.S. Commerce Secretary Gina Raimondo.

Weak DRAM pricing, partly related to weaker consumer demand, is expected to take a toll on the group’s fiscal first-quarter earnings after Wednesday’s close.

Micron expects profit per share of about $1.72, with revenue rising about 85% from last year to $8.72 billion.

Solid HBM, soft DRAM

Micron itself forecasts revenue of about $8.7 billion, with a margin of error of $200 million, and earnings per share of about $1.74.

Micron said profit margins will increase by 3 percentage points to 39.5%, in part due to increased sales of higher-priced HBM.

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The group said the total addressable market for HBM chips, also made by South Korea’s SK Hynix and Samsung Electronics, will rise from $4 billion in 2023 to about $25 billion in 2025.

Citigroup analyst Christopher Danely reiterated his “buy” rating and $150 price target in a note released on Monday, expecting the group to issue “results and guidance slightly below the consensus driven by legacy DRAM weakness.”

Memory is a key technology driver

“While there is excess DRAM inventory in the PC and mobile end markets (50% of F24 sales), this should dissipate this spring and be replaced by strong performance in the data center end market (35% of F24 sales) ) offset by.

However, the analyst said that “taking into account the supply and demand dynamics in the coming year, he is still optimistic about the recovery of DRAM.”

Meanwhile, Elazar Advisors analyst Chaim Siegel believes Micron Technology’s earnings play an important role in the near-term outlook for the technology market.

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“Micron is memory. Memory is in everything in technology and technology-driven markets,” he said in a recent report.

He added: “If consumers are weak and technology is weak and it’s not offset by artificial intelligence, then something isn’t perfect at the market’s all-time high.”

Micron Technology shares rose 2.6% in pre-market trading, opening at $105.20 per share on Monday.

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