On Tuesday, Citi updated its outlook on Micron Technology (NASDAQ:MU), reducing the stock's price target to $150 from the previous $175 while retaining a Buy rating.
The adjustment comes as the firm anticipates Micron to unveil its fiscal fourth quarter 2024 results on September 25, after the market closes.
"We expect the company to post results and guidance below Consensus driven by legacy DRAM weakness," said Citi.
The analysis by Citi points to an accumulation of DRAM inventory within the PC and handset markets. However, the firm predicts that this buildup is likely to be resolved by the end of the year. Despite the short-term challenges, Citi's outlook for Micron remains positive, with expectations of revenue and gross margin improvements in the forthcoming quarters.
In other recent news, Micron Technology has experienced several adjustments in its stock price targets, despite maintaining steady fundamentals. Analysts from Morgan Stanley (NYSE:MS) expressed difficulty in justifying Micron's current valuation, projecting earnings per share (EPS) of $3.7 for the year. Meanwhile, Raymond James reduced its price target to $125, citing slower near-term growth in non-HBM DRAM and NAND markets. Mizuho Securities also adjusted its price target to $140, forecasting significant growth in the High Bandwidth (NASDAQ:BAND) Memory (HBM) market due to advancements in artificial intelligence.
Susquehanna maintained a Positive rating but reduced the price target to $175, considering Micron's recent update on their November quarter DRAM and NAND bit shipments.
Amid these developments, Micron has resumed its stock buyback program and launched its PCIe Gen6 solid-state drive (SSD) technology and ninth-generation (G9) triple-level cell (TLC) NAND solid-state drives (SSDs). Furthermore, in collaboration with ASML (AS:ASML), Micron ordered the "High NA" tool, promising advancements in computer chip manufacturing. However, potential new restrictions by the United States government could limit China's ability to procure advanced artificial intelligence memory chips, which could impact Micron.
InvestingPro Insights
In light of Citi's revised outlook for Micron Technology (NASDAQ:MU), a closer examination of real-time data and insights from InvestingPro can provide investors with a more nuanced understanding of the company's financial health and stock performance. According to InvestingPro, Micron has a market capitalization of $96.67 billion, indicating its significant presence in the semiconductor industry. Despite facing challenges, as reflected by a negative P/E ratio of -62.19, analysts remain optimistic about the company's sales growth in the current year. This optimism is further supported by Micron's consistent dividend increases over the past three years.
InvestingPro data also reveals that Micron's revenue has grown by 17.6% over the last twelve months as of Q3 2024, showcasing the company's ability to expand its top-line figures. However, the gross profit margin stands at 11.42%, which points to the weak margin issues Citi mentioned. On the balance sheet front, Micron's liquid assets surpass its short-term obligations, providing a cushion for operational flexibility. Additionally, with a fair value estimate from analysts at $151, there's a potential upside compared to the recent close price of $87.18, though this should be tempered with the understanding that the stock has experienced a significant price decline over the last three months.
For investors seeking a more comprehensive analysis, there are additional InvestingPro Tips available on the company's profile, which can provide deeper insights into Micron's performance and future prospects. These tips delve into the company's industry standing, profitability forecasts, and debt levels, among other critical financial metrics.
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