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UBS upgraded its outlook on Micron Technology (NASDAQ:) on Tuesday, raising the stock’s price target to $120 from $95, while maintaining a buy rating. The company’s analyst noted that Micron’s results are expected to align with the highest level of guidance provided by the company.
While Micron Technology did not issue a positive pre-announcement, expectations are for revenue and gross margin to be around $6-6.1 billion, respectively. These projections are considered satisfactory by the analyst, although not exceptional.
The current situation in the DRAM market is characterized by a slight moderation in demand for mobile devices and PCs following a period of inventory replenishment. However, the demand for servers is increasing due to the capacity allocated on Alta Bandwidth (NASDAQ:) Memory (HBM), which is influencing the availability of DDR5.
The analyst believes these developments are subtle and expects DRAM prices to increase in the second half of the year. This is due to continued server supply constraints and anticipated demand for new smartphone and PC models that require more DRAM for AI applications.
On the NAND front, the market is described as robust with growing visibility in enterprise Solid State Drives (SSDs). One point worth noting is the limited capital spending by manufacturers, which is contributing to higher prices in the market. In light of these observations, the analyst made slight changes to his May and August estimates for Micron, placing them above the consensus, and subsequently raised the price target.
Micron Technology’s updated price target reflects a more optimistic view of the company’s future performance, particularly in the NAND segment. The analyst’s comments suggest that while the immediate period may present a balanced set of conditions, the longer-term outlook, especially in terms of price dynamics and market demand, is positive.
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