On Thursday, Stifel, a financial services firm, adjusted its price target for Micron Technology (NASDAQ:MU), a leading semiconductor company. The new price target is set at $135, a decrease from the previous $165, while the firm maintains a Buy rating on the stock.
The adjustment comes ahead of Micron's fiscal fourth quarter (August) earnings report scheduled for September 25. Stifel's analysis notes that memory prices have shown signs of stabilization approximately a year after reaching their lowest point. However, the firm observes recent indications that average selling price (ASP) strength is waning.
Stifel suggests that despite concerns about potential oversupply in the coming year, demand for high-bandwidth memory (HBM) remains robust and predictions of excess supply are not supported by evidence. The firm points out that consumer electronics sales, particularly the product mix, have been disappointing, which could lead to a temporary slowdown in the market.
Memory suppliers may be hesitant to increase bit shipments if it means accepting lower prices, according to Stifel. This caution is reflected in the firm's revised estimates for Micron's first (November) and second (February) fiscal quarters, anticipating a more moderate ASP environment.
While lowering the price target to $135—based on 13.5 times the revised calendar year 2025 earnings per share (EPS) estimate—Stifel remains optimistic. The firm believes that the recent decline in Micron's share price and the current valuation, which ranges between 2.0 and 2.5 times the tangible book value, indicate that market expectations have been recalibrated ahead of the upcoming earnings report.
In other recent news, Micron Technology unveiled its Crucial P310 2280 Gen4 NVMe solid-state drive (SSD), promising double the performance of Gen3 SSDs and a 40% speed increase over its predecessor.
The SSD is aimed at a broad consumer base, including gamers, students, and creative professionals. The company's stock price targets have been adjusted by several firms, including Citi, Morgan Stanley, Raymond James, and Mizuho Securities, citing factors such as DRAM weakness, valuation concerns, and slower near-term growth.
Despite these adjustments, Micron has resumed its stock buyback program and launched its PCIe Gen6 solid-state drive technology and ninth-generation triple-level cell NAND solid-state drives. Analysts from these firms expect improvements in Micron's revenue and gross margins in the upcoming quarters, despite short-term challenges.
InvestingPro Insights
As Micron Technology (NASDAQ:MU) approaches its fiscal fourth-quarter earnings report, the InvestingPro data provides a deeper insight into the company's financial health and market position. With a market capitalization of $96.86 billion and a challenging P/E ratio standing at -63.24, reflecting the company's recent struggles, investors are closely watching for any signs of turnaround. Despite the negative earnings per share (EPS) over the last twelve months, analysts predict that Micron will return to profitability this year, which could be a catalyst for the stock's recovery.
InvestingPro Tips suggest that Micron has a history of raising its dividend, having done so for three consecutive years, which could appeal to income-focused investors. Additionally, analysts anticipate sales growth in the current year, which may signal improving business prospects. However, with gross profit margins considered weak at 11.42%, the company's cost management and pricing power remain areas for potential improvement. Notably, Micron is recognized as a prominent player in the Semiconductors & Semiconductor Equipment industry, which may offer some resilience amidst market fluctuations.
Investors may also take comfort in knowing that Micron's liquid assets exceed short-term obligations, indicating a solid liquidity position. While the stock has fared poorly over the last month, with a price total return of -19.59%, the long-term view shows a more positive one-year price total return of 24.13%. With the next earnings date set for September 25, all eyes will be on Micron's performance and future outlook. For those seeking additional insights, there are further InvestingPro Tips available, which can be explored for a more comprehensive analysis of Micron's investment potential.
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