Top Analyst Boosts Micron (MU) Stock Price Target by 56% Ahead of Q2 Earnings

Micron (NASDAQ:MU) heads into an important moment this week as investors wait for the memory chip maker’s fiscal second-quarter results, due Wednesday after the market closes. After years in which the memory business swung between oversupply and falling prices, the industry now finds itself in a very different environment – one where demand tied to AI is pushing prices higher across the board.

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That shift has been working in Micron’s favor. As tech companies continue building out data centers to train and run AI systems, demand for memory has risen alongside it. The result has been a steady climb in prices for both DRAM and NAND products in recent months.

In fact, according to Wedbush’s Matt Bryson, who ranks among the top 1% of analysts on Wall Street, the move has gone further than Micron itself originally projected.

When the company first laid out expectations for the fiscal second quarter, management suggested that average selling prices might rise by roughly 30%. Yet, by the time the CES conference arrived earlier this year, contract pricing for both DRAM and NAND had already climbed more than 50% in the first calendar quarter.

Since then, the increase has only expanded. Some memory contracts are now showing gains that approach – and in certain cases reach – triple digits.

Looking ahead to the second calendar quarter, Bryson believes pricing could continue climbing, with DRAM and NAND potentially rising another 30% to 50%. The exact outcome will depend partly on how the current quarter ultimately settles.

Conversations with industry participants following the Chinese New Year also point in the same direction. Demand for memory remains strong, according to Bryson, while supply conditions appear to be tightening rather than easing.

The outlook for Micron, then, is “clearly positive,” though it’s a bit trickier to model precisely. Bryson is confident that his previous estimates were too low, and that both FQ2 results and FQ3 guidance will likely exceed even his revised expectations. Additionally, expecting industry pricing in Q1 and Q2 to rise in the triple-digit range, Micron will ultimately capture the full benefit of these increases.

That said, there are some uncertainties. It’s not entirely clear how Micron’s contract pricing compares to broader industry trends, when exactly the higher prices will flow through to its income statement – partly because of its off-quarter reporting schedule – and how aggressive management will be in providing FQ3 guidance. With that in mind, Bryson is assuming a 40% increase in FQ2 pricing and a 25% lift in FQ3 results.

“Net,” the 5-star analyst summed up, “with both numbers moving higher and MU trading below what we view as typical peak earnings multiples, we see no reason to shift our positive view on the name (or more broadly the memory industry).”

Accordingly, Bryson has increased his price target from $320 to $500, suggesting shares will climb 11% higher in the months ahead. Hardly needs adding, but Bryson’s rating stays an Outperform (i.e., Buy). (To watch Bryson’s track record, click here)

Bryson’s view largely mirrors the broader tone on Wall Street. Of the 27 most recent analyst reviews, 26 are positive while just one remains on the sidelines, giving MU a Strong Buy consensus rating.

At the same time, the $455.74 average price target suggests limited upside from current levels. The apparent mismatch likely reflects the stock’s recent rally, which has already pushed shares close to many analysts’ earlier targets. As a result, several on the Street appear to be waiting for Micron’s upcoming earnings before revisiting their forecasts and potentially lifting their price targets further. (See MU stock forecast)

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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