On Friday, Citi maintained its Buy rating on shares of Micron Technology (NASDAQ:MU), while significantly raising the price target to $150 from the previous $95. The adjustment comes ahead of Micron's scheduled earnings report for its fiscal second quarter 2024 on March 20th.
The firm anticipates that the company will surpass consensus expectations and provide increased guidance for the third fiscal quarter due to robust DRAM pricing and shipments.
The analyst from Citi highlighted that the shipments of High Bandwidth (NASDAQ:BAND) Memory (HBM), which are being included in Nvidia (NASDAQ:NVDA) AI systems, are expected to contribute to Micron's performance. This product commands higher prices and margins, bolstering the company's financial outlook. As a result, Citi has revised its fiscal year 2025 earnings per share (EPS) estimate for Micron from $6.38 to $6.65.
The new price target of $150 is based on 15 times Citi's fiscal year 2026 EPS estimate of $10.03 for Micron. This valuation represents a 50% premium over Micron's historical price range. The rationale for this premium is the company's increasing exposure to the artificial intelligence (AI) sector, which has led to significant valuation expansions for other AI-related stocks like Broadcom (NASDAQ:AVGO) and AMD (NASDAQ:AMD).
Micron Technology, known for its memory and storage solutions, has been identified by Citi as a top pick in the sector. The firm's positive outlook is underpinned by the expectation that Micron's involvement in AI and the corresponding market dynamics will continue to enhance the company's value proposition to investors.
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