On Thursday, UBS reaffirmed its positive stance on Micron Technology (NASDAQ:MU), keeping a Buy rating and a $135.00 price target on the stock. The semiconductor company surpassed expectations with its recent financial results and guidance, which exceeded the anticipations of many investors. Micron's performance has been particularly notable given the prevailing pessimistic sentiment among investors, some of whom believed that the industry cycle might have already reached its peak.
Micron has continued to demonstrate technological leadership and projects a favorable supply and demand balance into the next year. UBS's endorsement of the stock is based on the expectation that the current fluctuations in inventory levels for PCs and smartphones are temporary. The firm emphasizes that the sustainability of the current cycle is largely dependent on the demand for High Bandwidth (NASDAQ:BAND) Memory (HBM), which is expected to rise due to robust demand for Graphics Processing Units (GPUs) in the coming years.
The analysis suggests that even without an upward revision in HBM demand projections, Micron's growth in other memory sectors is estimated at around 4-5% year-over-year for the next two years. This moderate growth might not be sufficient to meet the demand if there is a standard server update cycle or an Artificial Intelligence (AI)-driven PC cycle. The primary risk to Micron's outlook is the potential for competitors, such as Samsung (KS:005930), to increase supply aggressively. However, due to constraints on production space, significant oversupply is unlikely until 2026 and would require substantial capacity additions, especially outside of the HBM segment.
UBS has increased its earnings per share (EPS) estimates for Micron for calendar years 2025 and 2026 by approximately 9% and 10%, respectively. The price target remains unchanged at $135, based on a slightly lower tangible book value (TBV) multiple, while the firm's Buy rating is maintained. The report concludes that the introduction of new HBM platforms may constrain yields due to the complexities of increased stacking, but overall, UBS remains optimistic about Micron's prospects.
In other recent news, Micron Technology has been the focus of several analyst firms following robust earnings and impressive revenue results, largely due to strong demand for its AI-related memory chips.
TD Cowen raised its price target for Micron to $135, maintaining a Buy rating, based on anticipated milestones such as the qualification of Micron's B100 series and improved supply chain visibility. Piper Sandler and JPMorgan also maintained optimistic outlooks on Micron, with price targets of $150 and $180 respectively, citing the company's strategic shift towards high-value products and advancements in High Bandwidth Memory as key profitability drivers.
Micron also announced plans to expand its manufacturing footprint with new facilities in Idaho, India, and China, positioning itself to meet strong demand from data centers. Stifel and Morgan Stanley showed confidence in Micron's future prospects, with Stifel raising its target from $175 to $200 and Morgan Stanley increasing its price target to $114.
InvestingPro Insights
As Micron Technology (NASDAQ:MU) garners attention with its recent financial success and UBS's optimistic outlook, it's valuable to consider key metrics and insights from InvestingPro. Micron has consistently raised its dividend over the past three years, showcasing a commitment to returning value to shareholders. Analysts also anticipate sales growth in the current year, aligning with UBS's positive projections. Moreover, Micron's liquid assets surpass its short-term obligations, indicating a strong liquidity position that could support ongoing operations and investments.
From a data perspective, Micron's market capitalization stands at a robust $105.78 billion, reflecting investor confidence. Despite a negative P/E ratio of -68.02, analysts predict the company will return to profitability this year, which may help improve this metric. Additionally, the company's revenue growth has been impressive, with a 61.59% increase in the last twelve months as of Q4 2024, suggesting a strong market presence and sales performance.
InvestingPro offers a wealth of additional tips for Micron Technology, with a total of 9 listed, providing deeper insights into the company's financial health and market position. These insights, coupled with the real-time data, underscore the potential for Micron to navigate the semiconductor industry's challenges and capitalize on growth opportunities. For a more comprehensive analysis, visit InvestingPro for further details on Micron's financials and market performance.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.