Micron's stock could rocket 60%, says the new biggest bull on Wall Street

By Emily Bary

Micron is shipping with Nvidia systems and generally could gain more credit for its AI involvement, Citi says

Micron Technology Inc. has now found itself in a cool crowd, and that could translate to big gains for its stock, one analyst says.

Specifically, the company is shipping with Nvidia Corp. (NVDA) artificial-intelligence systems, which may help the company garner a new appreciation from Wall Street, according to Citi Research analyst Christopher Danely.

He just substantially boosted his price target on Micron shares (MU) to $150 from $95, with the new target higher than all those listed on FactSet. That target implies more than 60% upside from Thursday's closing levels.

See also: Micron's stock gets new buy call as it's deemed another chip-sector play on AI

Danely arrived at his target by applying a 15-times multiple to his fiscal 2026 estimate for earnings per share, which calls for just over $10. "This is a 50% premium to Micron's historic range, but we believe [Micron's] stock should get a premium given increasing AI exposure and [that] other AI-exposed stocks such as [Broadcom (AVGO)] and AMD have seen a 100% increase in their multiples," he wrote.

Micron is due to report fiscal second-quarter results on March 20, and Danely expects the company to beat consensus expectations while delivering an upbeat forecast on the heels of strong DRAM pricing and margin benefits from more expensive memory products.

Overall, he's upbeat about the trajectory for DRAM pricing, as he predicts average selling prices could rise 52% this year given minimal growth in production as well as growing demand for memory in AI applications.

Danely maintained his buy rating on Micron shares, which are up more than 1% in morning action Friday.

Don't miss: Why Nvidia's explosive stock gains aren't over yet, according to BofA

Cowen & Co. analyst Krish Sankar also weighed in positively on Micron's upcoming earnings report, as he boosted his price target to $120 from $100 overnight.

High-bandwidth memory "remains the centerpiece of attention," he wrote, as he stuck with his outperform rating. His fieldwork makes him even more upbeat on Micron's potential to win market share with its HBM3E product, as he flags the potential for Micron's market share to top 25% next calendar year "depending on the progress of back-end capacity expansion."

-Emily Bary

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

03-15-24 0941ET

Copyright (c) 2024 Dow Jones & Company, Inc.