On Thursday, Stifel, a financial services firm, adjusted its outlook on Micron Technology (NASDAQ:MU), reducing the stock's price target to $130 from $135 while sustaining a Buy rating. According to InvestingPro data, Micron's stock is currently trading near its Fair Value, with analyst targets ranging from $70 to $250. The adjustment follows Micron's report of first quarter earnings for fiscal year 2025, which matched expectations, but the company's guidance for the second quarter revenue and earnings fell short of Stifel's and consensus estimates.
Micron's guidance for the second quarter indicated a quarter-over-quarter decline, which was more significant than many had anticipated. While the performance of DRAM was in line with or better than expectations, NAND results were disappointing, particularly due to a temporary decrease in enterprise SSD demand. Despite these challenges, Stifel remains optimistic about Micron's prospects. InvestingPro data shows Micron maintains a strong financial position with a current ratio of 2.64, indicating liquid assets well exceed short-term obligations.
Stifel believes that the current situation represents a mid-cycle correction, expecting memory bit shipments for Micron to pick up again in the third and fourth quarters of fiscal year 2025. This forecast aligns with the company's guidance, which anticipates a resumption of growth following a period of inventory adjustment by original equipment manufacturers (OEMs) extending into early next year.
The financial services firm acknowledged both positive and negative takeaways from Micron's earnings call. Notably, industry efforts to limit NAND supply, including new production cuts by Micron itself, and further evidence of the company's strong execution in the DRAM sector, such as increased High Bandwidth (NASDAQ:BAND) Memory (HBM) targets and a new qualification for NVIDIA's (NASDAQ:NVDA) B200, provide grounds for optimism.
In light of these developments, Stifel has revised its fiscal year 2025 and calendar year 2025 estimates for Micron downward. Nevertheless, the firm recommends purchasing Micron shares, viewing the current period as an opportunity to buy during a mid-cycle reset. InvestingPro analysis reveals strong revenue growth potential, with analysts forecasting 52% growth for FY2025.
For deeper insights into Micron's valuation and growth prospects, including 12 additional ProTips and comprehensive financial metrics, check out the full Pro Research Report available on InvestingPro.
In other recent news, Micron Technology has been under the spotlight as various analyst firms adjusted their price targets and outlooks.
Raymond (NS:RYMD) James reduced its price target to $120, while Goldman Sachs, Mizuho (NYSE:MFG), and Baird adjusted theirs to $128, $115, and $130 respectively. Despite these adjustments, all firms maintained positive ratings on the stock.
The adjustments followed Micron's first-quarter financial results, which were slightly above expectations, and a second-quarter forecast that fell short of analyst predictions. High Bandwidth Memory (HBM) remains a strong point for Micron, with revenue more than doubling quarter over quarter. The company's management has increased its Total (EPA:TTEF) Addressable Market (TAM) estimate for HBM to $30 billion by 2025, up from the previous estimate of $25 billion.
Despite challenges with excess inventory in the PC and smartphone segments and a steeper than anticipated decline in NAND pricing, Raymond James, Goldman Sachs, and Mizuho expressed optimism for the medium term. They anticipate that DDR (NYSE:SITC) inventory levels will normalize within the next one to two quarters and highlighted the positive impact of NAND production cuts.
Baird projects that Micron's HBM will contribute to an annualized EPS run rate of $3 by the end of 2025. Meanwhile, Piper Sandler, despite a cut in the price target, remains optimistic about Micron's potential to capitalize on its HBM offerings.
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