On Friday, Wells Fargo reiterated its Overweight rating on Micron Technology (NASDAQ:MU) shares with a steady price target of $190.00. The firm noted that Micron Technology received $33 million in government incentives during the third fiscal quarter of 2024, a decrease from the $149 million received in the previous quarter and $184 million from the same period last year. Micron now reports $340 million in receivables related to government incentives, a significant increase from $105 million at the end of the fourth fiscal quarter of 2023.
The company's financial obligations include a $672 million balance in non-current unearned government incentives, which shows a slight increase from $662 million in the preceding quarter. Micron's capital expenditure guidance for fiscal year 2024, which is approximately $8.0 billion, accounts for government incentives, suggesting a potential positive impact on depreciation from government-funded investments over time.
Micron has established a memorandum of terms with the U.S. Department of Commerce, which could result in up to $6.1 billion in direct funding from the CHIPS Act for the development of its facilities in Idaho and the first two fabrication plants in New York. Additionally, the company is qualified for up to $7.5 billion in federal loans and will benefit from a 25% investment tax credit on qualified semiconductor manufacturing investments.
Furthermore, Micron has a non-binding agreement with the state of New York to potentially receive up to $5.5 billion in funding for a planned four-fabrication facility in New York over the next 20-plus years. This long-term commitment is part of the state's support for Micron's expansion plans and the broader semiconductor manufacturing industry.
In other recent news, Micron Technology's financial performance and future projections have been the subject of multiple analyst reviews. The company's fourth-quarter revenue projection, largely driven by the sale of its high-bandwidth memory chips, met expectations. BofA Securities and CFRA maintained their Buy ratings on Micron, highlighting the company's potential to capitalize on the growing demand for artificial intelligence-related components.
TD Cowen and Piper Sandler, on the other hand, increased their price targets for Micron, citing the company's robust capital expenditure plans and promising revenue projections, especially in the high-bandwidth memory sector. UBS revised its earnings per share estimates for Micron for calendar years 2025 and 2026, reducing them slightly but maintained its Buy rating.
InvestingPro Insights
As Micron Technology positions itself to capitalize on government incentives and expand its operations, investors are keeping a close watch on the company's financial health and market performance. According to recent data from InvestingPro, Micron has a market capitalization of $146.43 billion, despite a negative gross profit margin of -0.32% over the last twelve months as of Q2 2024. This may raise concerns about the company's current profitability; however, the revenue growth for the same period shows a substantial quarterly increase of 57.7%, indicating potential for future improvement.
An InvestingPro Tip highlights that Micron has raised its dividend for three consecutive years, reflecting confidence in its financial stability and commitment to shareholder returns. Additionally, the company is trading at a high EBITDA valuation multiple, suggesting that investors may be expecting significant future earnings growth. With 10 analysts having revised their earnings upwards for the upcoming period, there is optimism surrounding Micron's performance prospects.
For those considering an investment in Micron Technology, there are 14 additional InvestingPro Tips available to help inform your decision. To explore 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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