Micron stock rated Buy by UBS, notes strong HBM momentum and technology leadership

EditorAhmed Abdulazez Abdulkadir
Published 01/13/2025, 09:24 PM
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On Monday, UBS analyst Timothy Arcuri reiterated a Buy rating on Micron Technology shares (NASDAQ:MU), maintaining a price target of $125.00. According to InvestingPro data, Micron's stock currently trades near $99, with analysts' targets ranging from $70 to $250, suggesting significant potential upside. The company's strong market position is reflected in its robust revenue growth of 79.8% over the last twelve months.

Arcuri's statement followed a series of industry checks on pricing, leading to adjustments in the Micron model. Despite near-term inventory challenges expected to last longer than previously anticipated, Arcuri predicts a return to modest undersupply in the DRAM market by the fourth quarter of 2025 and into calendar year 2026.

Arcuri expressed confidence in Micron's High Bandwidth (NASDAQ:BAND) Memory (HBM) roadmap, particularly highlighting the HBM3E 12-Hi at NVIDIA (NASDAQ:NVDA), which is seen as advantageous due to delays in competitor qualifications. InvestingPro analysis shows Micron maintains a strong financial position with a healthy current ratio of 2.72 and operates with moderate debt levels, supporting its technological advancement initiatives. At the recent Consumer Electronics Show (CES), Micron was noted for its positive developments in HBM technology.

While acknowledging a reduction in NAND pricing expectations, the analyst pointed out that most companies, with the exception of YMTC, are exercising supply discipline. Micron, SK Hynix, and Kioxia have already begun cutting production, and Arcuri anticipates that Samsung (KS:005930) will likely follow suit. This is expected to lead to a more balanced supply-demand environment by the fourth quarter of 2025.

Arcuri mentioned that while an immediate catalyst for growth might not be evident, the broader narrative for Micron remains unchanged. The firm has established a leading position in technology, and the progression of its HBM technology is diverting wafers from conventional PC and smartphone memory markets. This shift is expected to tighten the market once more, especially if there's an uptick in server refreshes or AI PC cycles.

With a PEG ratio of 0.18 and expected sales growth of 41% this fiscal year, Micron shows promising value metrics. For deeper insights into Micron's valuation and growth prospects, including exclusive financial health scores and additional ProTips, check out the comprehensive research available on InvestingPro.

In other recent news, Micron Technology has announced plans to invest $7 billion to expand its manufacturing capacity in Singapore, in response to growing demand for advanced memory chips. The new facility, which is expected to become operational in 2026, will create approximately 1,400 jobs and be utilized for packaging high-bandwidth memory chips. In a related development, Citi analyst Christopher Danely upheld a Buy rating for Micron Technology, citing a projected turnaround in the DRAM market beginning in 2025.

Micron's data center segment, which constitutes half of the company's revenue, is showing consistent growth each quarter. Meanwhile, TD Cowen has maintained its favorable stance on Micron, projecting that 2026 will be a period of growth for the company. Despite a reduction in the stock's price target, TD Cowen remains confident in Micron's long-term prospects.

On a different note, Citi released a report detailing potential negative implications for the U.S. semiconductor equipment industry, following Micron's recent financial disclosures. Despite these concerns, Micron's High Bandwidth Memory (HBM) revenue more than doubled quarter over quarter, leading to an increase in the Total (EPA:TTEF) Addressable Market (TAM) estimate for HBM to over $30 billion by 2025.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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