Investing.com -- Shares of Micron Technology (NASDAQ: NASDAQ:MU) surged by 8% on Monday as market participants reacted to positive comments from industry analysts ahead of the company's first-quarter earnings report.
JPMorgan (NYSE:JPM) analyst Harlan Sur reiterated an Overweight rating and a $180.00 price target on Micron, highlighting a potential revenue and EPS beat driven by a favorable product mix and strong shipments, particularly for its high-bandwidth memory products.
Sur's analysis anticipates that Micron's earnings, set to be released after market close on Wednesday, will likely exceed consensus expectations. The projection is based on better mix-adjusted DRAM pricing, influenced by robust shipments of Nvidia (NASDAQ:NVDA)'s H200 platform and a recovery in server demand. These factors are expected to compensate for weaker segments like PC, smartphone, and consumer markets.
However, the outlook for the second quarter is mixed, with JPMorgan predicting revenues, gross margin, and EPS to be guided below consensus due to persistent headwinds in traditional DRAM pricing. This may be partially offset by a shift towards higher-margin HBM (High Bandwidth (NASDAQ:BAND) Memory) products, where Micron is gaining share on key Nvidia platforms.
Despite these near-term challenges, gross margins for the second quarter are expected to remain stable or improve slightly quarter-over-quarter as Micron executes on cost reductions and HBM becomes a more significant part of the revenue mix.
"MU shares are down ~35% since peaking in June (versus SOX down ~13%), which suggests bearish sentiment is somewhat priced in and we believe the stock should start to outperform in early/1H 2025 as the market starts to discount a more meaningful recovery in memory pricing for the latter part of CY25," Sur wrote in a note.
Citi analyst Christopher Danely also reiterated a Buy rating and a $150.00 price target on Micron, with a forecast of first-quarter results and guidance slightly below consensus due to legacy DRAM weakness. Danely remains positive about the DRAM recovery, citing favorable supply/demand dynamics for the calendar year 2025.
Both analysts agree that despite current challenges, Micron's strong position in enterprise SSD and robust demand from data centers are likely to contribute to a recovery in memory pricing and company performance in the latter half of 2025.
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