Not all market giants have reported their latest quarterly earnings yet. As Wednesday’s trading session comes to a close on March 20th, Micron (NASDAQ:MU) is gearing up to release its fiscal Q2 2024 results.
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Ahead of the print, the memory giant finds itself at a pivotal juncture where emerging memory trends meet the ongoing integration of AI-accelerated computing. The company is committed to seizing the opportunities presented by the rapid expansion of AI and its strategic collaboration with Nvidia to distribute HBM3e memory alongside their GPUs exemplifies this gameplan, making the company well-placed to leverage the considerable potential of a projected $1 trillion AI server retooling sector.
The partnership with its chip giant peer is on Citi analyst Christopher Danely’s mind when assessing Micron’s prospects, and in a good way.
“We expect the company to post upside to Consensus and increased guidance for F3Q24 given strong DRAM pricing and shipments of higher-priced, higher-margin, High Bandwidth Memory (HBM) which is shipping with Nvidia AI systems,” the analyst explained.
For the quarter, based on higher margins, Danely expects Micron to deliver EPS of ($0.28), above consensus at ($0.42). The analyst sees revenue hitting $5.30 billion, amounting to a 12% sequential increase, in line with the Street’s forecast.
As for the outlook, due to better DRAM sales, Danely is looking for Micron to guide for $6.00 billion in revenue for FQ3, up 13% quarter-over-quarter, and just above the Street’s $5.98 billion estimate. On the bottom-line, Danely is calling for EPS of $0.26, some distance better that Wall Street’s ($0.10), on account of “higher gross margins due to better-than-expected DRAM pricing and HBM revenue.”
While the stock has performed well over the past year (up by 63%), it hasn’t matched the display of some peers, but Danely doesn’t see that remaining the case for long.
“MU multiple should expand given other AI stocks,” the 5-star analyst summed up. “We expect Micron to ship $100.0 million in HBM memory in F3Q24 and we expect Micron’s multiple to expand given it’s AI exposure and its peers expansion.”
Such is Danely’s confidence in the Micron story, he raised his price target from $95 to a Street-high of $150, suggesting the stock will climb ~60% higher over the coming months. Unsurprisingly, Danely rates Micron as a Buy. (To watch Danely’s track record, click here)
Almost all of Danely’s colleagues agree with his thesis. The stock claims a Strong Buy consensus rating based on 25 Buy ratings and just 1 Hold and Sell, each. However, the average target is rather more modest; at $104.76, the figure represents 12-month returns of ~12%. (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.
