On Thursday, KeyBanc Capital Markets sustained a positive outlook on Micron Technology (NASDAQ:MU) by increasing the stock's price target to $160 from $150, while keeping an Overweight rating on the shares. This adjustment follows Micron's announcement of robust fiscal third-quarter earnings, which surpassed expectations, and a fiscal fourth-quarter guidance that aligns with forecasts.
Micron's recent financial performance was bolstered by a significant increase in DRAM and NAND pricing, which rose by 20% quarter over quarter. Key highlights from the report include the high-bandwidth memory (HBM) being largely sold out for fiscal year 2025, with anticipated revenues in the billions of dollars. Moreover, HBM revenues in the fiscal third quarter exceeded $100 million, with gross margins surpassing both the company's overall margins and those specific to DRAM.
The company has also addressed yield concerns, noting that memory pricing is predicted to continue its upward trend throughout fiscal year 2025. Gross margin expansion is expected to be driven largely by price increases and a shift in sales mix, including higher sales of high-capacity DIMMs, data center SSDs, and HBM.
KeyBanc's optimism is fueled by these positive developments, leading to increased estimates and the revised price target for Micron Technology's stock. The firm cites the strong quarter, robust pricing, and expected revenue growth from high-demand memory products as key factors contributing to the raised target.
InvestingPro Insights
In light of KeyBanc Capital Markets' revised price target and the optimistic outlook on Micron Technology, it's pertinent to consider a selection of metrics and InvestingPro Tips that underscore the investment thesis. The real-time data from InvestingPro highlights the company's significant market capitalization of $148.21 billion, indicating its substantial presence in the industry.
Despite a negative P/E Ratio of -97.19, analysts are predicting a turnaround with sales growth in the current year. This is further supported by the fact that analysts have recently revised their earnings estimates upwards for the upcoming period. Micron's robust one-year price total return of 114.4% reflects its strong performance in the market, aligning with KeyBanc's positive stance.
Moreover, two InvestingPro Tips particularly relevant to Micron's current outlook include the company's consistent dividend growth over the past three years and the anticipation of profitability this year, as per analyst forecasts. These insights suggest a potential for sustained investor returns and a positive shift in financial health.
For investors seeking more in-depth analysis, InvestingPro offers additional tips on Micron Technology, which can be found at https://www.investing.com/pro/MU. Be sure to use coupon code PRONEWS24 for an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and discover the 14 additional InvestingPro Tips that could further inform your investment decisions.
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