Micron (MU) Stock: Multiple Analysts Increase Price Targets After Strong Quarterly Results

TLDR

• Citi increased its price target for Micron to $510 from $430, reaffirming a Buy rating following exceptional earnings
• UBS similarly elevated its target to $510 from $475, maintaining a Buy rating, though it cautioned that potential margin improvements might already be factored into the stock price
• Micron announced February quarter revenue of $23.9 billion and earnings per share (EPS) of $12.20, surpassing projections by 21% and 36% respectively
• Guidance for the May quarter indicated revenue of $33.5 billion and EPS of $19.15, exceeding forecasts by 42% and 70%
• Micron secured a five-year customer agreement, which was longer than UBS anticipated, suggesting robust strategic demand for memory products

(SeaPRwire) –   Micron Technology (MU) experienced an eventful week. The memory manufacturer saw its stock decline by approximately 4% in after-hours trading subsequent to its earnings release, even though its financial results significantly surpassed Wall Street’s expectations.

Micron Technology, Inc., MU

This market response drew considerable notice. Analysts identified two primary factors unsettling investors: an increased capital expenditure forecast for fiscal year 2027, and worries regarding the potential peak of gross margins — Micron projected 81% gross margins, which notably exceeds Nvidia’s 75%.

Profit-taking, following a substantial rally leading up to the earnings announcement, was also a probable contributor. The stock had climbed 354% in the year preceding the earnings report.

By Friday morning, Micron’s stock showed a fractional decrease in premarket trading.

Atif Malik, an analyst at Citi, reaffirmed his Buy rating and elevated his price target from $430 to $510. He attributed this adjustment primarily to margins that exceeded expectations.

Malik effectively articulated the core discussion surrounding the stock. Investors are contemplating whether MU can sustain its upward trajectory alongside increasing DRAM prices — akin to the Windows PC DRAM cycle of the 1990s — driven by robust AI demand and constrained new fabrication capacity, or if prices will stabilize after a significant surge in the first quarter.

He suggested the stock might retain its advances but indicated a potential short-term shift towards semiconductor capital equipment companies due to the elevated capital expenditure forecast.

Timothy Arcuri, an analyst at UBS, also increased his price target, moving it to $510 from $475, while maintaining a Buy rating. He recognized the impressive quarter with strong results and an upward revision in guidance, but expressed a more cautious outlook regarding future developments.

Margins and Customer Deals

UBS observed that with gross margins now projected to exceed 80%, a significant portion of the potential gains from additional strong results and guidance increases might already be incorporated into the stock’s valuation. The firm holds a historical perspective that Micron’s stock generally reaches its peak approximately nine months prior to its peak margins.

The firm also highlighted new strategic customer agreements secured by Micron, which could introduce short-term pressures on margins. Customers exchange some immediate revenue for enhanced long-term supply assurance.

The initial agreement spans five years — exceeding UBS’s expectations. UBS commented that customers would only commit to such deals if they considered memory to be strategically vital. The firm posits that investors typically favor stocks demonstrating durability, and these agreements indicate enduring structural shifts.

Strong Numbers Across the Board

The financial outcomes for the February quarter were undeniably strong. Revenue reached $23.9 billion, and EPS stood at $12.20, surpassing consensus estimates by 21% and 36% respectively.

The guidance for the May quarter proved even more remarkable. Micron forecasted revenue of $33.5 billion and EPS of $19.15 — outperforming expectations by 42% and 70%.

Numerous other analysts increased their price targets subsequent to the earnings release. Cantor Fitzgerald adjusted its target to $700, Rosenblatt raised its to $600, Wolfe Research elevated its to $550, and BNP Paribas Exane emphasized Micron’s advantageous position for a multi-year expansion of AI data centers.

Bernstein SocGen reaffirmed an Outperform rating, highlighting an increase in average selling prices. The robust pricing for Micron’s DRAM and NAND products was a recurring theme throughout analyst reports.

As of Friday, MU’s stock was trading at $443.52.