Key Takeaways:
Melius Research initiated coverage on Micron Technology Inc. (NASDAQ: MU) on Monday with a ‘Buy’ rating and a $700 price target, representing a nearly 35% potential upside from its recent trading levels.
While the firm did not name a specific analyst, the rating aligns with a broadly bullish Wall Street consensus driven by surging demand for high-bandwidth memory (HBM) used in artificial intelligence applications. Micron's stock has soared over 560% in the past year amid a historic memory shortage.
The new $700 target from Melius matches a similar view from Cantor Fitzgerald and contributes to a positive analyst landscape where 30 of 40 analysts rate the stock a “Strong Buy.” The average analyst price target stands at $546.09, with the highest on the Street at $852.
The new rating comes as Micron benefits from what it describes as a supply-demand imbalance that will last into 2028. The company projects the HBM market will expand from $35 billion in 2025 to $100 billion by 2028, suggesting a prolonged cycle of elevated pricing and profitability that supports a structural re-rating for the stock.
Micron’s recent financial results reflect the surging demand. For its second quarter ended February 26, the company reported revenue of $23.9 billion, a 196.3% year-over-year increase that far surpassed the prior year's $8.1 billion. Non-GAAP earnings per share skyrocketed 682.1% to $12.20, crushing the consensus estimate of $8.80.
The Boise, Idaho-based company has been a primary beneficiary of the AI buildout, which requires vast amounts of its DRAM and NAND memory products. Competitors like SanDisk and other semiconductor firms are also experiencing a cyclical upswing, though analysts project the current cycle may be more sustainable than previous boom-bust periods.
Looking ahead, Micron provided strong guidance for its fiscal third quarter, projecting revenue of approximately $33.5 billion and non-GAAP EPS of about $19.15. The forecast underscores management’s confidence that it can continue to capitalize on the tight supply conditions. Analysts forecast the company’s earnings will grow another 69.4% in fiscal 2027 before a potential slowdown in 2028.
The initiation from Melius adds another bullish voice to the consensus view that Micron's earnings power has structurally increased. Investors will next look to the company's upcoming earnings report to see if the powerful HBM demand and pricing strength is sustained.
This article is for informational purposes only and does not constitute investment advice.
