On Thursday, Susquehanna maintained a Positive rating on shares of Micron Technology (NASDAQ:MU) but reduced the price target to $175 from $185. The adjustment follows Micron's recent update indicating that their November quarter DRAM and NAND bit shipments are expected to be roughly flat compared to the previous quarter. This outlook has been factored into revised earnings estimates.
The firm acknowledges a "mid-cycle" correction in the memory sector but maintains that a longer-term up-cycle is underway. Despite this correction, the analyst from Susquehanna believes that DRAM is experiencing a structural benefit from the release of successive generations of High Bandwidth (NASDAQ:BAND) Memory (HBM) products, which helps to avoid commoditization. Similarly, NAND is seen to benefit from limitations in bit supply growth.
Susquehanna's perspective is that the memory industry's supply-demand dynamics will remain tight into 2026, supporting a three-year up-cycle. This view, coupled with the recent market pullback, is seen to offer an attractive risk/reward profile for Micron's stock. The firm's analysis suggests that while gross margin trends present downside risk as the cost curve flattens, a focus on product mix and rational investment can mitigate this risk.
Historically, memory up-cycles have lasted only 4 to 8 quarters, but the current cycle is expected to extend up to 12 quarters. This departure from past trends is attributed to the continued introduction of new HBM products and constrained wafer capacity and bit production growth.
Susquehanna's updated fiscal year 2025 and calendar year 2025 earnings per share estimates for Micron are $9.49 and $11.70, respectively, which are close to the consensus estimates of $9.66 and $11.71.
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