Top analyst reviews Micron stock price target ahead of Q1 results release

Shares of Micron Technology rose in early trading Monday after a top Wall Street analyst offered a bullish assessment of the memory chip maker ahead of its quarterly earnings report later in the week.

micron (MU) has underperformed the Nasdaq this year, rising about 24%, while the benchmark rose 32.7%, as prices for the technology group’s DRAM memory chips, a key product component for consumer technology, fell about a third of its value total sales continue to be subdued.

However, investors are betting on Micron’s newly established position in the market for high-bandwidth memory (HBM) chips, which improve performance and reduce power consumption in AI systems.

These chips, including a new HBM3E iteration, are now being built into Nvidia’s (NVDA) H200 processors and the newly developed Blackwell systems. The chips have made Micron one of the few global companies able to compete in this fast-growing market.

This was confirmed earlier this month by the US government’s $6.1 billion Chips and Science Act support, which aims to support Micron’s plans to invest around $125 billion in new manufacturing facilities in New York and Idaho to invest.

“Advanced memory chips are the foundation of all advanced technologies, and America is rebuilding its capacity to produce these critical capabilities for the first time in nearly two decades,” said U.S. Secretary of Commerce Gina Raimondo.

Weakness in DRAM prices, partly linked to weakening consumer demand, is likely to hurt the group’s fiscal first quarter earnings, which are expected after trading closes on Wednesday.

Micron is expected to report profit of about $1.72 per share, with revenue rising about 85% from a year ago to $8.72 billion.

Micron itself forecast sales in the region of $8.7 billion with a margin of error of $200 million and earnings of around $1.74 per share.

Profit margins, Micron said, would improve 3 percentage points to 39.5%, partly due to a stronger mix of higher-priced HBM sales.

Related: Analysts revise Broadcom stock price targets after fourth-quarter results

The group estimated that the total addressable market for HBM chips, also made by South Korea’s SK Hynix and Samsung Electronics, will rise from $4 billion in 2023 to around $25 billion in 2025.

Citigroup analyst Christopher Danely, who reiterated his buy rating and $150 price target on Micron in a note published Monday, expects the group to deliver “earnings and guidance slightly below consensus, reflecting legacy DRAM weakness is due to”.

The story continues