On Monday, KeyBanc Capital Markets maintained its Overweight rating and $145.00 price target for Micron Technology (NASDAQ:MU), traded on NASDAQ:MU. The decision follows the release of memory contract pricing data for September by inSpectrum, which showed stability in the market.
According to the data, 8Gb DDR4 DRAM pricing remained unchanged month-over-month and saw a 3.1% increase quarter-over-quarter. Similarly, 8GB DDR5 DRAM prices were flat compared to the previous month but rose by 9% on a quarterly basis. The 512Gb NAND pricing was steady both month-over-month and quarter-over-quarter.
The analyst from KeyBanc described the September pricing results as neutral for both DRAM and NAND segments. Despite the flat pricing in the short term, the firm anticipates a sustained pricing recovery for both NAND and DRAM in 2024. This outlook is underpinned by the industry's production discipline and a shift towards high-value products such as High Bandwidth (NASDAQ:BAND) Memory (HBM) and DDR5.
The long-term perspective of KeyBanc is optimistic, citing secular trends in artificial intelligence (AI), 5G, data centers, and edge/endpoint devices as key drivers for memory demand. The analyst highlighted the DRAM market's health and profitability prospects, which are considered more favorable than those of NAND.
This is attributed to the industry's consolidation, with only three major producers remaining—Micron, Samsung (KS:005930), and SK Hynix—coupled with strong long-term demand drivers, disciplined capacity expansion, and extended equipment lead times.
In other recent news, Micron Technology has been making substantial strides in its financial performance, primarily driven by robust earnings and revenue growth. The company's fourth fiscal quarter results surpassed expectations, largely due to demand in the data center sector, including traditional and AI applications. Micron's high-bandwidth memory (HBM) yield gains have been noted as a positive development, contributing to improved gross margins in the fourth quarter.
The company has also reiterated its goal of generating multiple billions in revenue from HBM by the fiscal year 2025. Analysts from KeyBanc, Morningstar, and Morgan Stanley have highlighted the robust demand for Micron's memory chips, particularly for AI applications. Bernstein and Baird maintained positive outlooks on Micron, while Citi also maintained a Buy rating.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Micron Technology's financial position and market performance. The company's market capitalization stands at $116.22 billion, reflecting its significant presence in the semiconductor industry. Micron's revenue for the last twelve months as of Q4 2024 reached $25.11 billion, with a notable revenue growth of 61.59% over the same period.
InvestingPro Tips highlight Micron's strong market position and recent performance. The company has seen a significant return over the last week, with a 14.89% price total return. This aligns with KeyBanc's optimistic outlook on the memory market's recovery. Additionally, Micron is recognized as a prominent player in the Semiconductors & Semiconductor Equipment industry, supporting the analyst's view on the company's potential to benefit from secular trends in AI, 5G, and data centers.
It's worth noting that Micron operates with a moderate level of debt and its liquid assets exceed short-term obligations, suggesting financial stability. This could be crucial as the company navigates the anticipated pricing recovery in 2024.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips on Micron Technology, providing deeper insights into the company's financial health and market position.
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