Why BofA Cuts Micron Price Target, But Still Likes The Stock

Although DRAM price reductions caused investor concerns, Micron Technology, Inc’s MU guidance for the first quarter of fiscal 2022 reflects stable margins, according to BofA Securities.

The Micron Technology Analyst: Simon Woo reiterated a Buy rating for Micron Technology while reducing the price target from $125 to $105.

The Micron Technology Thesis: While the quarter ending February is seasonally weak, there is likely to be minimal price cut pressure, Woo said in the note to clients.

He cited three reasons for this:

• Low inventories among competitors
• Strong chip demand for servers and mobiles
• Channel inventory restocking in view of a worsening of the memory chip supply shortage

“We model 2Q FY22 GAAP GM/OPM at 45%/33% (with only 3% DRAM ASP decline). This is far higher than FY19-21 average,” the analyst wrote.

“Our Buy rating is based on strong earnings turnaround/growth in FY21-22,” Woo stated. He also expects the company to use its free cash flows for active shareholder returns via buybacks.

MU Price Action: Shares of Micron Technology had declined by 0.68% to $72.60 at the time of publication Wednesday morning.

(Photo: Micron)