Micron Stock Price Target Lifted to $170 at Wedbush Ahead of Q3 Report
Wedbush Securities has increased its target price for Micron Technology shares, raising the previous estimate from $130 to $170. This adjustment comes just before Micron is set to release its Q3 earnings report next week.
Historical Concerns and Current Confidence
The firm’s analysts noted in a recent report, "In our view, the primary question with MU is history suggests the stock is expensive vs. asset levels." Despite these historical concerns, Wedbush's financial experts still stand by an Outperform rating for Micron. This indicates their belief that Micron's stock will continue to perform better than average market returns.
Supply Shortages in Memory Market
One major factor for this optimistic outlook is the cyclical nature of the memory industry. While memory components like NAND and DDR5 often experience supply and demand fluctuations, Wedbush analysts believe there will be a shortage throughout this year and likely into 2025. This is partly due to limited new investments in these areas, combined with growing requirements for High Bandwidth Memory (HBM).
Financial Impact
This shortage is expected to have a positive impact on Average Selling Prices (ASPs), revenues, margins, and earnings per share (EPS). "As such, we believe ASPs, revenues, margins, and EPS are all destined to cycle higher, with the balance sheet also set to lift as Free Cash Flow (FCF) flows on to MU's books," the analysts explained. They further added, "Net, we expect only positive news for MU's financials for some time to come and expect the stock will continue to lift until we see a change in industry investment plans."
Market Reaction and Future Outlook
Following this upbeat assessment, Micron shares saw a 2.7% increase in premarket trading on Tuesday. This response appears to validate Wedbush's confidence in the company's financial future.
In summary, Wedbush Securities remains bullish on Micron Technology's stock, predicting continued growth driven by supply constraints and strong financial performance. Keep an eye on Micron's Q3 earnings report next week for further developments.
