On Thursday, CFRA reiterated its Buy rating on Micron Technology (NASDAQ:MU) with a price target of $170.00, affirming confidence in the company's financial outlook. The firm adjusted its fiscal year 2024 earnings per share (EPS) forecast to $1.17, up from the previous estimate of $1.04, while maintaining its fiscal year 2025 and 2026 EPS projections at $9.30 and $14.26, respectively.
Micron reported earnings of $0.62 per share for the May quarter, surpassing the CFRA's estimate of $0.53 and marking a significant improvement from the $1.43 loss per share in the comparable period. Sales increased by 17% from the February quarter and 82% year-over-year, attributed to a 20% sequential rise in DRAM and NAND prices. The company's gross margin expanded to 28%, benefiting from an improved product mix and cost efficiencies.
The revenue and gross margin guidance provided by Micron for the upcoming periods align with expectations. The initial fiscal year 2025 outlook indicates an increase in capital intensity to the mid-30s percentage range, which is considered reasonable to support the growing demand for high bandwidth memory (HBM), which requires three times the wafer supply compared to DDR5.
CFRA's analysis suggests that Micron is well-positioned to capitalize on the growing demand for artificial intelligence-related components across various markets, including PCs, smartphones, and data center servers, through the calendar year 2025. The shift towards higher-value products such as HBM, high-capacity DIMMs, and data center solid-state drives (SSDs) is expected to further enhance margins and drive the company towards record profitability.
In other recent news, Micron Technology has been the subject of several significant developments. TD Cowen, Piper Sandler, UBS, and Barclays have all adjusted their price targets for Micron, with the respective targets being $160, $150, $153, and $145. All firms maintained a positive outlook on the stock, citing the company's robust capital expenditure plans and promising revenue projections, especially in the high-bandwidth memory (HBM) sector.
Micron's third-quarter revenue surpassed estimates, reporting a revenue of $6.81 billion. The company's fourth-quarter revenue projection of $7.6 billion, primarily driven by the sale of its HBM chips, matched average analyst predictions. Micron 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.
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
The latest data from InvestingPro underscores Micron Technology's (NASDAQ:MU) dynamic market presence and financial performance. Analysts have revised their earnings upwards for the upcoming period, reflecting optimism in Micron's ability to navigate the semiconductor industry's challenges. This revision aligns with CFRA's increased earnings per share forecast and suggests that the market shares CFRA's confidence in Micron's financial trajectory.
InvestingPro Tips indicate Micron's ability to sustain dividend growth, with dividends raised for 3 consecutive years, and the anticipation of sales growth in the current year. This information complements CFRA's outlook, presenting Micron as a company poised for continued financial health and shareholder returns.
Real-time InvestingPro Data highlights a mixed financial picture. While Micron's Market Cap stands strong at $157.64B USD, the company has experienced a significant Revenue Growth of 57.7% in the most recent quarter. However, it's important to note that the company has been operating at a loss over the last twelve months, with a Gross Profit Margin at -0.32%. Nonetheless, Micron's strong price performance is evident, with a 1 Year Price Total Return of 114.4%, suggesting robust investor confidence.
For those looking to delve deeper into Micron's financial details and uncover additional InvestingPro Tips, visit https://www.investing.com/pro/MU. There are 15 additional tips available to help investors make informed decisions. Remember to use coupon code PRONEWS24 to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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