UBS recently updated its outlook on Micron Technology, raising the stock’s price target to $120 from $95 while maintaining a Buy rating. The firm’s analyst expects Micron’s results to align with the higher end of the company’s guidance. While there was no positive pre-announcement from Micron, revenue and gross margin are projected to be around $6-6.1 billion and in the high teens, respectively, which the analyst considers satisfactory, albeit not exceptional.
The current state of the DRAM market is characterized by a slight moderation in mobile and PC demand after a period of inventory replenishment. However, there is a rise in server demand due to capacity being allocated to High Bandwidth Memory (HBM), impacting DDR5 availability. The analyst anticipates DRAM prices to increase in the second half of the year due to tight server supply and expected demand from new smartphone and PC models requiring more DRAM for AI applications.
In the NAND market, there is increasing visibility into enterprise Solid State Drives (SSDs), with limited capital expenditure from producers contributing to higher pricing. The analyst made slight adjustments to May and August estimates for Micron, positioning them above the consensus and subsequently raising the price target based on these observations.
The updated price target for Micron Technology reflects a more optimistic view of the company’s future performance, especially in the NAND segment. While the immediate term may present a balanced set of conditions, the longer-term outlook, particularly in terms of pricing dynamics and market demand, is positive according to the analyst.