Micron Technology’s Price Target Boosted at Baird Ahead of Earnings

Baird analysts increased their price target for Micron Technology (NASDAQ:MU) to $172 from $150, maintaining their Outperform rating, ahead of the company’s upcoming Q3/24 earnings, scheduled to be released on Wednesday.

The analysts see significant upside for Micron, driven by strong DRAM pricing trends. They forecast that 8GB DDR4 DIMM contract pricing will rise 23% quarter-over-quarter in Q2, followed by increases of 8% in Q3 and 5% in Q4. Spot pricing is also expected to accelerate, moving from a low single-digit percentage increase in Q2 to a mid-teen percentage increase in Q4. This trend bodes well for contract pricing into 2025.

The analysts argue that a 30x P/E ratio is justified for Micron, considering its projected exposure to High Bandwidth Memory (HBM) as the company exits next year. Assuming HBM revenue accounts for 20% of Micron's total DRAM revenue by the end of 2025, they project a potential $3 in EPS for fiscal year 2026.