On Friday, Wolfe Research increased its price target for Micron Technology (NASDAQ:MU) shares to $200 from the previous $150, while retaining an Outperform rating. The firm's optimism is fueled by stronger industry conditions and the potential of High Bandwidth (NASDAQ:BAND) Memory (HBM). Analysts from Wolfe Research have recently engaged in discussions with industry players Hynix and Samsung (KS:005930), which have informed their positive outlook.
The analyst's note indicates that the upcoming report from Micron may include bullish commentary, but the short-term market conditions are not the central reason for their confidence in the stock. Wolfe Research believes that memory suppliers, including Micron, are intentionally limiting supply in the short term. This strategy is to prevent customers from accumulating inventory in anticipation of projected price hikes.
The firm's favorable stance on Micron is largely based on projections for the calendar years 2025 and 2026. Wolfe Research suggests that their calculations support a potential earnings per share (EPS) of $20 for Micron.
Within this figure, HBM could contribute approximately $3 to the company's earnings power. However, the more significant impact is expected to come from the tightening supply of commodity DRAM, which would likely lead to better pricing and margins.
The analyst emphasizes that the viability of this scenario underpins their bullish perspective on Micron's stock, despite its recent price surge. The expectation is that as demand for HBM grows, it will lead to a tighter overall supply in the market, benefiting Micron's financial performance in the longer term.
In other recent news, Micron Technology has experienced a shift in its financial landscape. Micron's stock was downgraded from Buy to Hold by Aletheia Capital due to execution concerns over the company's High Bandwidth Memory 3E (HBM3E). This has led to Aletheia Capital retracting its previous $500 million revenue projection for Micron's HBM for fiscal year 2024.
On a brighter note, several firms have maintained or upgraded their ratings on Micron Technology, indicating a positive outlook. Wells Fargo (NYSE:WFC) maintained an Overweight rating and increased the price target to $190, while Fox Advisors, Stifel, and UBS also raised their price targets to $185, $165, and $155 respectively.
In legal developments, Micron Technology was ordered to pay $445 million to Netlist (OTC:NLST) in a patent dispute, a decision that could potentially triple due to the finding of willful infringement. In addition, the New York Independent Grid Operator raised concerns over potential energy supply shortfalls, which could affect projects like the Micron NY Semiconductor plant. These are the recent developments surrounding Micron Technology.
InvestingPro Insights
Recent data from InvestingPro provides a detailed financial snapshot of Micron Technology (NASDAQ:MU), complementing the analysis by Wolfe Research. The company's market capitalization stands robust at $153.95 billion, reflecting its significant position in the industry.
Despite a challenging environment with a negative P/E ratio of -40.53 and a decline in revenue growth over the last twelve months by -20.6%, Micron has shown a strong price total return of 120.42% over the past year, hinting at investor confidence in its future prospects.
InvestingPro Tips highlight that Micron has increased its dividend for three consecutive years and that analysts expect the company to be profitable this year. Moreover, with 9 analysts having revised their earnings upwards for the upcoming period, there is a sense of optimism surrounding Micron's financial outlook. These insights suggest that the company's strategic moves and the anticipated growth in High Bandwidth Memory (HBM) could indeed play a significant role in its future earnings potential as suggested by Wolfe Research.
For more in-depth analysis and additional InvestingPro Tips, interested readers can explore Micron's profile on Investing.com, and use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are currently 16 additional tips available on InvestingPro that can provide investors with a more comprehensive understanding of Micron's financial health and market position.
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