On Monday, JPMorgan (NYSE:JPM) reiterated its Overweight rating and $180.00 price target for Micron Technology (NASDAQ:MU), ahead of the company's expected earnings report after the market close on Wednesday.
Currently trading at $102.50 with a market capitalization of $113.65 billion, Micron enjoys a strongly bullish Wall Street consensus rating of 1.46 (where 1 is Strong Buy).
According to InvestingPro data, analyst price targets range from $70 to $250, reflecting diverse views on the company's potential.
The firm forecasts that Micron's revenue and earnings per share (EPS) for the November quarter (FQ1) will surpass consensus estimates, driven by a better product mix and strong shipments related to NVDA's H200 platform, coupled with a rebound in traditional server demand. This is anticipated to counterbalance the softer DDR4/DDR5 demand due to ongoing weakness in the PC, smartphone, and consumer markets.
For the February quarter (FQ2), the firm predicts that Micron's guidance for revenue, gross margin, and EPS will likely fall below consensus, as challenges in traditional DRAM pricing continue. However, this is expected to be partly mitigated by a shift towards a more favorable product mix in HBM (High Bandwidth (NASDAQ:BAND) Memory), with Micron gaining market share on key NVDA platforms.
Despite the current downward pressure on commodity DRAM pricing in the first half of 2025, JPMorgan projects that Micron's gross margins will remain relatively stable or possibly increase by up to 50 basis points quarter-over-quarter. The margins are expected to improve in the second half of 2025 as the company focuses on cost reductions and HBM becomes a larger part of its shipment and revenue mix.
The firm notes that HBM gross margin continues to be accretive to the overall DRAM gross margin and should positively impact margins going forward as Micron improves production yields.
Looking ahead, JPMorgan anticipates that the down-cycle in traditional DRAM will be short-lived, as memory suppliers shift capacity from traditional DRAM to HBM, which is expected to consume approximately 20-25% of the total industry DRAM capacity in 2025.
InvestingPro analysis shows Micron's revenue is forecast to grow by 52% in FY2025, despite current gross margins of 22.35%. For deeper insights into Micron's financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
The firm also expects that demand for memory will pick up in the second half of 2025 due to higher memory content requirements for edge AI applications. This shift is likely to result in blended DRAM pricing beginning to rise in the latter part of 2025, potentially leading to a supply shortage in conventional DRAM and sustained robust demand for HBM through the next year and into 2026.
While there are indications that NAND pricing has worsened, JPMorgan believes Micron is less affected by this trend due to its strong position in the enterprise SSD market, where demand for AI applications remains high. The firm's analysis suggests that the current bearish sentiment on Micron's stock, which has seen a significant 27.34% decline over the past six months, may be overdone. According to InvestingPro's Fair Value analysis, Micron appears slightly undervalued at current levels, despite trading at a P/E ratio of 146.43.
JPMorgan concludes that Micron's shares are positioned to outperform in early to the first half of 2025 as the market begins to anticipate a recovery in memory pricing for the latter part of the year.
In other recent news, Micron Technology has been the subject of several positive analyst ratings ahead of its first-quarter fiscal year 2025 results.
Citi reaffirmed its Buy rating, anticipating a recovery in the DRAM market, while TD (TSX:TD) Cowen and Stifel maintained their Buy ratings, highlighting the High Bandwidth Memory market's growth potential. Wells Fargo (NYSE:WFC) echoed this bullish outlook, focusing on Micron's advances in HBM and DDR5 supply tightness.
In terms of revenue, Micron showed impressive growth of 61.6% in the last twelve months, with analysts expecting continued sales growth this year. The company also secured a significant subsidy of over $6.1 billion from the U.S. Department of Commerce to support domestic semiconductor manufacturing, with plans to construct facilities in New York and Idaho.
Furthermore, analysts are forecasting a 52% increase in FY2025 revenue, driven by Micron's advancements in HBM. The company aims to capture over 20% of the HBM market share by 2025, a market estimated to be worth more than $25 billion.
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