Micron Technology, Inc. (MU) Shares Could Reach $76 Within a Year: Top Analyst

Micron's earnings keep growing, Needham boosts price target.


Micron Technology, Inc. (NASDAQ:MU) printed another quarter that beat expectations and again provided guidance above Street estimates as the semiconductor giant continues to benefit from tight memory supply/demand dynamics, increasing prices, and cost reductions.

Specifically, pro forma EPS of $2.02 on revenue of $6,138MM was above the Street estimates of $1.82 and $5,940MM, respectively. FQ1 revenue was guided to a range of $6.1 billion to $6.5 billion, above the Street estimate of $6.05 billion, while pro forma EPS was guided to a range of $2.09 to $2.23, above the Street’s $1.82.

In reaction, Needham’s top analyst Rajvindra Gill boosts his price target for MU from $50 to $76, and reiterates a Buy rating on the stock. The new target represents a potential upside of 106% from where the stock is currently trading.

Gill commented, “Following a solid quarter and guide, we are increasing our FY18 non-GAAP EPS estimate and our PT to $76 – representing a 10x P/E on our new Non-GAAP FY18 EPS of $7.60. We believe this multiple is reasonable as we are simply applying a median historical multiple on a discounted earnings run-rate of $2.16 EPS/q (Nov. guidance). Currently, the stock is trading at a trough multiple on the perception of a “peak earnings cycle.” We believe the reverse is true, i.e., we assert it should be trading at a market multiple on ongoing earnings growth. We don’t believe we are at the peak of the cycle as end markets for DRAM are significantly more diverse than in years past; stabilizing the volatility of the pricing and perhaps lengthening the contracts. Moreover, memory is crucial for server deployment, AI advancement, autonomous driving as well as core demand for smartphone content growth.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, 5-star analyst Rajvindra Gill has a yearly average return of 21.1% and a 68% success rate. Gill has a -21% average return when recommending MU, and is ranked #28 out of 4660 analysts.

Most of Wall Street echoes a bullish point of view, with TipRanks analytics exhibiting MU as a Strong Buy. Based on 22 analysts polled in the last 3 months, 20 rate a Buy on Micron stock, while 2 maintain a Hold. The 12-month average price target stands at $49.39, marking a nearly 34% upside from where the stock is currently trading.