Micron (NASDAQ:MU) is set to dial in its fiscal fourth quarter results (August quarter) once today’s trading action comes to a close. The company has been grappling with a sluggish DRAM market, largely due to oversupply, prompting a cautious outlook from some analysts on Wall Street ahead of the announcement.
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J.P. Morgan’s Harlan Sur, a 5-star analyst ranked in the top 1% of the Street’s stock experts, doesn’t foresee any fireworks today, but he also doesn’t predict disaster.
“We anticipate the team to drive results/guidance that is in-line with recently lowered consensus estimates on CY 2H commodity DRAM weakness (PC/ smartphones/consumer), partially offset by strong AI/server demand,” Sur noted. In fact, as for August quarter revenues, GMs, and EPS, Sur expects “slightly better than consensus estimates.”
The real concern on Wall Street lies with the guidance for the November quarter. Consensus expectations have already been revised downward, and Sur believes the forecast will likely align with analysts’ current projections. Nevertheless, the analyst remains optimistic about Micron’s future, expecting “continued DRAM/NAND Q/Q pricing and GM increases through CY24 and into CY25 and strong HBM bit shipment/pricing visibility (starting to extend into CY26).”
Moreover, looking further ahead, Sur thinks the memory industry is “still in the early stages of the up-cycle.” The cycle usually features 6-8 quarters of positive EPS revisions, and right now, we are only three quarters in. During this period, forward EPS estimates are generally pushed upwards by around 2-3x, and memory stocks tend to rise in line with these positive EPS revisions.
“Indeed,” the 5-star analyst goes on to say, “we and our global memory team expect to see Q/Q blended pricing improvement for DRAM through mid-2026 while NAND pricing strength should persist into 2025.”
But there’s one big difference to note between this up-cycle and previous ones. The AI-driven demand for HBM DRAM has not only emerged as a new driver in the industry (by 2025, it is expected to consume 20-25% of the total DRAM industry capacity), but it is also “the fastest growing new memory driver in the history of the memory market.”
So, should investors consider picking up some MU shares ahead of the readout? Yes, appears to be the conclusion reached by Sur, who rates the stock as Overweight (i.e., Buy) with a price target of $180. There’s plenty of upside – 87.7% to be exact – should the target be met over the next 12 months. (To watch Sur’s track record, click here)
23 other analysts agree with Sur’s bullish stance, and they are pitted against just 1 Hold and Sell, each, all culminating in a Strong Buy consensus rating. Going by the $151.54 average price target, a year from now, investors will be pocketing returns of 58%. (See Micron stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
