Key Takeaways
- Vijay Rakesh of Mizuho continues backing MU with an Outperform rating and $1,375 target, suggesting 60% potential gains
- Shares currently hover near $857 after declining 12% in the past month from June highs exceeding $1,200
- Concerns about Chinese rival CXMT are exaggerated, with significant supply additions unlikely before 2028
- Latest quarterly results showed $25.11 EPS with revenue hitting $41.46 billion, representing 345.8% annual growth
- Wall Street maintains Strong Buy consensus with mean target of $1,569.07, indicating over 84% potential upside
Shares of Micron Technology (MU) currently change hands around $857, marking approximately a 12% decline during the last month and significantly below the late June high that exceeded $1,200. Market participants have grown increasingly worried about the semiconductor manufacturer’s ability to sustain its premium gross margin levels.
However, Vijay Rakesh from Mizuho, who holds a prestigious 5-star analyst rating, remains unconvinced by the bearish sentiment. Following discussions with Micron’s management team, he reaffirmed his Outperform recommendation while maintaining his $1,375 valuation target. This figure represents roughly 60% appreciation potential from today’s trading levels.
His investment rationale centers on a straightforward premise: memory chip availability will remain constrained. According to Rakesh’s analysis, “we believe Micron sees DRAM/NAND market tight well through 2027E,” a condition that should sustain robust pricing and healthy margins.
The analyst also highlighted that Micron’s forward P/E multiple currently sits under six, suggesting the stock appears undervalued given its earnings capacity. Extended supply contracts are anticipated to secure pricing advantages on upcoming memory products, underpinning gross margins exceeding 80%.
Chinese Rivalry Fears Exaggerated
A significant concern weighing on MU has been the emergence of Chinese competitor ChangXin Memory Technologies (CXMT). News that Apple sought regulatory approval to purchase CXMT components amid global shortages intensified these worries.
Rakesh dismissed this concern. He indicated that meaningful additional supply from CXMT is “only coming in 2028E and still no meaningful change to supply-demand imbalance.” He further emphasized that CXMT concentrates mainly on serving the Chinese domestic market and doesn’t possess the production capabilities to manufacture cutting-edge memory chips in volume.
Meanwhile, Handelsbanken Fonder expanded its Micron position by 6.3% during Q2, purchasing 37,420 additional shares to bring its total holdings to 630,685, valued at approximately $728 million. Institutional ownership of the company now stands at 80.84%.
Robust Financial Performance Supports Bullish Outlook
Micron’s latest quarterly report provided substantial ammunition for bulls. The chipmaker delivered $25.11 in earnings per share, surpassing the $21.39 consensus estimate by $3.72. Revenue reached $41.46 billion, significantly exceeding the $35.91 billion projection and climbing 345.8% compared to the prior year.
Management established Q4 2026 EPS guidance between $30 and $32. The analyst community collectively forecasts $72.93 in EPS for the complete fiscal year.
Regarding analyst coverage, Bank of America elevated its price target to $1,500 with a Buy rating. Cantor Fitzgerald similarly maintains a $1,500 target alongside an Overweight stance. Goldman Sachs adjusted its target upward from $900 to $1,100 while maintaining a Neutral position.
The overall Wall Street consensus remains at Buy, with a mean 12-month price objective of $1,569.07, implying more than 84% appreciation potential from present levels.
Worth noting: company insiders have divested 162,179 shares valued at roughly $167.8 million during the previous quarter, including CEO Sanjay Mehrotra’s disposition of 31,285 shares at an average price of $926.83 on July 24th.
HBM availability also continues to be limited. UBS observed that Nvidia might have decreased anticipated HBM4E content in its forthcoming VR300 GPU because of supply limitations, a situation that could additionally bolster Micron’s pricing strength.
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