BofA Raises Micron's Price Target Following Upbeat Guidance Update

Micron Technology, Inc. MU is scheduled to announce fiscal third-quarter results June 29.

The memory chip company is likely to report upbeat quarterly results and issue positive fourth-quarter guidance, which may prove to be catalysts for the stock, according to BofA Securities.

The Micron Analyst

Simon Woo reiterated a Buy rating for Micron Technology, while raising the price target from $60 to $70.

The Micron Thesis

Micron Technology on Wednesday raised its outlook for the May quarter, citing stronger chip demand for the remote work economy, improved pricing trends and “quite normal operations,” Woo said in a Thursday note. (See his track record here.)

Micron raised the guidance for GAAP gross margins and earnings from a range of 28.5%-31.5% to 32%-33% and from 26-56 cents per share to 61-66 cents per share, respectively.

“This is consistent with our recently raised global memory forecast (eg, higher DRAM ASP, stronger NAND shipment),” the analyst said. 

Woo expressed optimism regarding the margin improvement continuing nto the second half of fiscal 2020 and even through fiscal 2021 and 2022.

Micron Technology’s mix improvement and cost reduction “should also be outstanding,” the analyst said. 

BofA raised its earnings estimates for fiscal 2020, 2021 and 2022 from $1.89 to $2.23, from $4.06 to $4.25 and from $5.67 to $6.02, respectively.

MU Price Action

Shares of Micron Technology were down 3.48% at $47.73 at the time of publication Thursday.

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