On Thursday, Raymond (NS:RYMD) James adjusted its price target on shares of Micron Technology (NASDAQ: NASDAQ:MU), bringing it down to $120.00 from the previous $140.00, while continuing to endorse the stock with an Outperform rating. With a current market capitalization of $116.5 billion and an overall "FAIR" financial health rating according to InvestingPro, the stock trades near $104.
The adjustment follows Micron's first-quarter financial results, which were slightly above expectations, and a second-quarter forecast that fell short of analyst predictions.
The analyst noted that High Bandwidth (NASDAQ:BAND) Memory (HBM) remains a strong point for Micron, with revenue more than doubling quarter over quarter. This aligns with the company's impressive 61.6% year-over-year revenue growth and analysts' expectations of continued sales growth this year, as revealed by InvestingPro data.
Micron's management has increased its Total (EPA:TTEF) Addressable Market (TAM) estimate for HBM to $30 billion by calendar year 2025, up from the previous estimate of $25 billion, and aims to achieve a market share similar to its current DRAM share by the second half of 2025.
Micron has recently started shipping to NVIDIA (NASDAQ:NVDA)'s B200/GB200 platforms and has announced two additional high-volume customers, which underscores the company's technological edge in the industry. Despite these advances, challenges persist with excess inventory in the PC and smartphone segments and a steeper than anticipated decline in NAND pricing.
The Raymond James analyst expressed optimism for the medium term, anticipating that DDR (NYSE:SITC) inventory levels will normalize within the next one to two quarters and highlighting the positive impact of NAND production cuts.
The firm's bullish stance is largely based on the potential of HBM, which is seen as a significant growth driver with the possibility to prolong the industry's upcycle into calendar year 2026.
With a price-to-book ratio of 2.55x and a strong return over the last three months, InvestingPro analysis reveals 12 additional key insights about Micron's valuation and growth prospects, available to subscribers.
The company's Pro Research Report provides comprehensive analysis of what matters most for investors considering this prominent semiconductor player.
In other recent news, Micron Technology has been in the limelight as various analyst firms adjusted their outlooks on the company. Goldman Sachs, Mizuho (NYSE:MFG), Baird, and Piper Sandler all revised their price targets for Micron, citing different factors impacting the company's performance.
Despite projecting revenues and earnings below analysts' earlier expectations for the second fiscal quarter, Micron maintains a positive long-term outlook due to anticipated growth in High-Bandwidth Memory (HBM) and stability in server DRAM.
Goldman Sachs lowered its revenue and non-GAAP EPS forecasts for fiscal years 2025-2027, while Mizuho highlighted a high single-digit percentage quarter-over-quarter increase in DRAM pricing and a low single-digit percentage decline in NAND pricing.
Baird expressed optimism about Micron's earnings potential, projecting that Micron's HBM will contribute to an annualized EPS run rate of $3 by the end of 2025. Piper Sandler, despite a cut in the price target, remains optimistic about Micron's potential to capitalize on its HBM offerings.
These are recent developments that indicate a mixed outlook for Micron. The company's guidance for the second fiscal quarter indicates a weaker than anticipated top line, but the firm's potential for market share gains in the profitable HBM sector, which is expected to complement an improving supply-demand landscape for DRAM and NAND, fuels optimism.
The company's strategic positioning, especially in the HBM domain, and the anticipated robust performance in HBM and server DRAM are expected to counterbalance the broader weakness in the conventional DRAM and NAND markets.
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