On Thursday, Micron Technology (NASDAQ:MU) shares received an optimistic update from Stifel, with the firm raising its rating from Hold to Buy and significantly increasing the price target to $120 from the previous $80. The upgrade comes after a period of observation where memory prices indicated a positive shift due to supply adjustments.
The firm noted that while broader electronics demand hasn't surged as expected, current evaluations show that DRAM supply, which is a major contributor to Micron's profits, is on a path to recovery. This anticipated tightening of DRAM supply is expected to positively impact Micron's financial performance into the year.
Stifel's revised outlook is based on the projection that Micron's earnings will outperform the current consensus estimates for the calendar year 2025 (CY25). The firm's new earnings per share (EPS) estimate is $10, which contrasts sharply with the consensus of less than $7.
The revised price target of $120 reflects a forward price-to-earnings (P/E) ratio in the low teens, which Stifel considers reasonable given Micron's connection to the growing artificial intelligence and high-bandwidth memory (AI/HBM) markets. This new valuation suggests a more favorable view of the stock as it enters what Stifel describes as an early expansion period that could be more appealing to investors.
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