On Monday, UBS has increased its price target on Micron Technology (NASDAQ:MU) shares to $155 from the previous $125, while sustaining a Buy rating on the stock. The firm's decision follows recent checks in the industry which indicate that pricing for DRAM and NAND memory is trending upward.
This price adjustment is a response to the observed shift in capacity allocation towards High Bandwidth (NASDAQ:BAND) Memory (HBM) and a rise in capital expenditures, which are causing beneficial effects in both NAND and traditional DDR memory sectors.
The favorable market dynamics are expected to extend the current cycle, especially in the DRAM segment, where the industry faces a limitation on adding new wafer capacity until at least 2026.
UBS has addressed concerns regarding Micron's valuation, projecting that by the time gross margins reach their peak in the fourth calendar quarter of 2025, Micron's tangible book value (TBV) per share will be greater than $50 and will continue to increase.
The firm has previously demonstrated that Micron's stock price does not typically peak significantly before gross margins do. With the re-evaluation of sectors connected to artificial intelligence and an updated estimated earnings per share of approximately $17.50 for the calendar year 2025, UBS sees no valuation concerns that would hinder the stock's potential climb to the newly set price target of $155.
UBS's outlook on Micron remains positive, with the anticipation that the company's financial performance will support a continued upward trajectory in the stock's valuation. This update comes amid a broader market context where memory and storage technology companies are critical to the expanding AI industry.
In other recent news, Micron Technology has been at the center of several significant developments. The New York Independent Grid Operator (NYISO) raised concerns over potential energy supply shortfalls, which could affect energy-intensive projects like the Micron NY Semiconductor plant. Meanwhile, Mizuho maintained a Buy rating on Micron, raising the price target to $155 and highlighting potential market share growth in the second half of 2024.
On the legal front, Micron was ordered to pay $445 million to Netlist (OTC:NLST) in a patent dispute, a decision that could potentially triple due to the finding of willful infringement.
In the workforce sector, Micron, in partnership with GlobalFoundries (NASDAQ:GFS) and the U.S. National Science Foundation, launched an initiative to diversify the semiconductor workforce in the United States.
Lastly, Morgan Stanley upgraded Micron Technology stock from an Underweight rating to an Equalweight, raising the price target to $130. The firm cites current market dynamics, including high-bandwidth memory and NAND flash memory market conditions, as factors supporting Micron's near-term performance. These are the recent developments around Micron Technology.
InvestingPro Insights
As Micron Technology (NASDAQ:MU) garners a heightened price target from UBS, real-time data from InvestingPro further illuminates the company's financial landscape. Micron's market capitalization stands at a robust 145.0 billion USD, reflecting its significant presence in the semiconductor sector. Despite a challenging environment highlighted by a negative P/E ratio of -38.07 and a decline in revenue growth by -20.6% over the last twelve months as of Q2 2024, the company has managed to maintain a dividend yield of 0.35%, with dividends having been raised for three consecutive years.
InvestingPro Tips suggest that analysts are optimistic about Micron's sales growth in the current year, which aligns with UBS's positive stance. Furthermore, with a substantial 101.3% one-year price total return as of the given date, Micron has demonstrated a strong performance trajectory. The company is also trading near its 52-week high, at 97.62% of the peak price, underscoring investor confidence. For those interested in deeper analysis, InvestingPro offers additional tips on Micron, indicating factors such as its status as a prominent player in its industry and the anticipation of profitability in the current year. To access these insights and more, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
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