On Thursday, TD Cowen adjusted its outlook on Micron Technology (NASDAQ:MU), increasing the stock's price target to $160 from the previous $150, while maintaining a Buy rating. The firm's analyst cited Micron's capital expenditure (CapEx) guidance for fiscal year 2025, indicating near record-high spending levels. Additionally, the company's forecast for high-bandwidth memory (HBM) revenues in FY25 was highlighted as a positive factor, contributing to the analyst's confidence in maintaining the revenue estimate at $2.7 billion for calendar year 2025.
Micron Technology's guidance for the August quarter may have been weaker than what investors anticipated, yet the company's overall financial outlook appears to remain solid. The analyst noted that the softer guidance is likely not the sole reason for the stock's recent performance. Despite the cautious short-term outlook, the company's long-term financial plans, especially its capital expenditure forecast and gross margin (GM) predictions in the mid-30s percentage range, were seen as potentially premature but nonetheless reassuring for future growth.
The analyst emphasized the significance of Micron's HBM revenue guidance for FY25, which is expected to reach several billions of dollars. The firm's unchanged revenue estimate for HBM at $2.7 billion in CY25 reflects a stable view of Micron's market position and revenue potential in the high-bandwidth memory sector.
Micron's forward-looking statements about its financial strategy, particularly regarding capital expenditures and gross margins, have drawn attention from investors and analysts alike. The company's ambitious CapEx guidance for FY25 suggests a strategic focus on growth and expansion, which could position Micron favorably in the competitive memory market.
In summary, TD Cowen's revised price target for Micron Technology is based on the company's aggressive investment plans and promising revenue projections for high-bandwidth memory products. The firm maintains a positive stance on Micron's stock, underlined by a steady HBM revenue estimate and a Buy rating.
In other recent news, Micron Technology has been the focus of several significant developments. The company's fourth-quarter revenue projection of $7.6 billion, primarily driven by the sale of its high-bandwidth memory chips, matched average analyst predictions. Piper Sandler, UBS, and Barclays have adjusted their price targets for Micron to $150, $153, and $145, respectively, while maintaining their positive ratings on the stock.
Micron has also announced plans to increase its capital expenditures in the coming year, with about half of this investment aimed at expanding production capacity through the construction of new fabrication plants. This move is anticipated to support further growth in its front-end wafer supply. The company's third-quarter revenue surpassed estimates, reporting a revenue of $6.81 billion, indicating a positive trajectory for the company's end markets.
UBS revised its earnings per share estimates for Micron for calendar years 2025 and 2026, reducing them by approximately 10% and 14%, respectively, but maintained its Buy rating, citing Micron as a top player in the artificial intelligence market. Despite a recent dip in Micron shares, analysts from Goldman Sachs view this as an opportunity to increase investments in the company.
InvestingPro Insights
As Micron Technology (NASDAQ:MU) sets its sights on ambitious capital expenditure and revenue goals, recent metrics from InvestingPro provide a mixed financial snapshot. The company's market cap stands at a robust $157.64 billion. However, its P/E ratio is currently negative at -41.21, reflecting market skepticism about its profitability in the near term. Despite this, analysts remain optimistic, with 10 analysts having revised their earnings upwards for the upcoming period, aligning with the positive outlook from TD Cowen.
InvestingPro Tips highlight Micron's track record of raising its dividend for 3 consecutive years, which may appeal to income-focused investors. Additionally, the company's strong return over the past year, with a 114.4% one-year price total return, underscores its market performance despite recent profitability challenges. For those considering a deeper dive into Micron's financials and future prospects, InvestingPro offers an array of additional tips. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and gain access to a total of 15 InvestingPro Tips that can further inform investment decisions.
Investors may find encouragement in Micron's strategic focus on high-bandwidth memory, as well as its commitment to growth and expansion, as reflected in its CapEx guidance. With analysts predicting the company will be profitable this year, Micron's forward-looking statements and TD Cowen's confidence in the company's market position could be signs of a positive trajectory ahead.
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