AI and HBM Outlook Drive Mizuho Analyst to Raise Micron Technology's Price Target

Mizuho's Vijay Rakesh raised their price target on Micron Technology (NASDAQ: MU) by 4.8% from $124 to $130 on March 26, 2024. The analyst reiterated their Strong Buy rating on the stock.

According to the analyst, the increase in the price target reflects management's guidance and Nvidia's AI and High Bandwidth Memory (HBM) ramp outlook. Rakesh predicts that the HBM market will experience significant growth, estimating a three-year compound annual rate of 65% from 2023 to 2026. This growth is expected to reach $17.5 billion by the end of 2026.

In terms of financial performance, Micron Technology, Inc. reported strong results for Q2 2024. The company exceeded expectations with an EPS of $0.42, beating the Zacks Consensus Estimate of $(0.27) by 122%. This also represents significant growth compared to Q2 2023's EPS of $(1.91). Micron's revenue for the quarter was $5.82 billion, surpassing the Zacks Consensus Estimate of $5.33 billion and Q2 2023's revenue of $3.69 billion. The company's gross margin for the quarter was $1.16 billion.

Looking ahead, Micron's management provided guidance for Q3 2024. They expect an EPS range of $0.38 to $0.52 and revenue between $6.4 billion and $6.8 billion. The projected gross margin for the third quarter is anticipated to be in the range of 25% to 28%.

Micron's President and CEO, Sanjay Mehrotra, expressed confidence in the company's performance, stating that the strong Q2 results exceeded the high end of their guidance range. Mehrotra believes that Micron's product portfolio positions the company well for a strong second half of 2024. He also highlighted the multi-year opportunity enabled by AI, stating that Micron is one of the biggest beneficiaries in the semiconductor industry.

Analyst ratings play a crucial role in understanding market sentiment towards a stock. Currently, 90.9% of top-rated analysts rate Micron as a Strong Buy or Buy, indicating a positive outlook for the company. Only 4.5% of analysts see it as a Hold, while the same percentage recommends or strongly recommends selling the stock.

The recent performance of Micron's stock reflects its positive financial results and analyst sentiment. Since the latest quarterly report on March 20, 2024, the stock price has increased by 23.4%. Furthermore, the stock has shown impressive year-over-year growth of 98.7%, outpacing the broader market as the S&P 500 has risen by 30.8% during the same period.

Vijay Rakesh, the Mizuho analyst who raised the price target, ranks in the top 1% of Wall Street analysts according to WallStreetZen. With an average return of 19.9% and a win rate of 55.4%, Rakesh specializes in the Consumer Cyclical and Technology sectors.

Micron Technology, Inc. is a global leader in designing, manufacturing, and selling memory and storage products. The company operates through four segments: Compute and Networking Business Unit, Mobile Business Unit, Storage Business Unit, and Embedded Business Unit. Its product portfolio includes DRAM products, NAND products, and NOR memory products. Micron's memory and storage technologies cater to various markets, including cloud servers, enterprise, client, graphics, networking, and mobile devices. The company also offers SSDs, component-level solutions, and other discrete storage products. Micron markets its products through multiple channels, including direct sales, independent representatives, distributors, and retailers.

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