These are good times to be a Micron (NASDAQ:MU) investor. Shares are up by 65% since the turn of the year as the stock has been a beneficiary of the AI-fueled market rally.
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With the company about to deliver its fiscal third-quarter 2024 report today after the close, Rosenblatt’s Hans Mosesmann, whose successful stock predictions have landed him at 3rd spot amongst the Street’s stock pros, thinks the odds are staked in favor of the memory giant.
“We expect Micron to deliver a beat-and-raise as we enter one of the largest memory cycles in history,” said the 5-star analyst. “This growth is driven by the increasing demand for memory in artificial intelligence applications (which scales directly with memory content), a new ramp-up in the HBM (high bandwidth memory) industry that reduces supply available for traditional DRAM, and ongoing discipline in memory capital expenditures.” Mosesmann expects this “trend will continue into 2026/27.”
The segment’s supply of HBM remains a “critical factor” to watch, as there are difficulties in meeting demand, a situation Mosesmann expects to persist in 2025. Producing HBM3e continues to be challenging, exacerbated by the ongoing rapid increase in demand.
As for Micron specifically, Mosesmann’s take on HBM extends beyond its impact on topline growth to include its “broader implications” for DRAM bit supply. To produce each HBM DRAM wafer requires 2 to 3 times more wafers compared to standard DDR5 PC/Server DRAM, thereby meaningfully influencing the overall supply.
“So,” the analyst goes on to say, “even if Micron were to ship zero HBM next fiscal year (we currently have a single-digit contribution), there would be a significant upside to our up 35% y/y sales growth just on the ASP upside. In other words, allocating more HBM to wafer DRAM leads to lower overall bit supply and longer cycles, regardless of yields.”
Numbers-wise, Mosesmann is calling for FQ3 revenue and adj. EPS of $6.60 billion/$0.44, respectively. Interestingly, both are actually below consensus at $6.66 billion/$0.48 but in line with Micron’s updated guide from March. As for the FQ4 outlook, the analyst’s sales and adj. EPS estimates land at a respective $7.25 billion/$0.71, also not as high as the Street’s forecast of $7.57 billion/$1.02.
All told, ahead of the print, Mosesmann rates MU shares a Buy, backed by a Street-high price target of $225, a figure factoring in one-year returns of 59.5%. (To watch Mosesmann’s track record, click here)
Barring one fencesitter, all of Mosesmann’s colleagues are on the same page here. Based on 19 Buys vs. 1 Hold, the analyst consensus rates the stock a Strong Buy. The forecast calls for 12-month returns of ~11%, considering the average target clocks in at $156.37. (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.
