Key Takeaways
- Micron Technology shares are down 25% from their June 25 closing high, even after record fiscal fourth-quarter results.
- Needham reiterated its Buy rating and $1,650 price target on Oct. 22, 81% above Wednesday’s close.
- Analysts have raised their fiscal 2027 earnings estimate to $176.50 a share from $159.46 a month ago, yet the stock trades at 5.2x forward earnings.
- The numbers support the call because the target implies just 9.4x forward earnings. Fiscal first-quarter results in December are the next test.
Micron Technology (MU) has lost 25% from its June high, even as its profits kept climbing. Needham thinks the market has it wrong: on Thursday, it reiterated its Buy rating and $1,650 price target, 81% above Wednesday’s close.
AI jitters, then China
Micron closed at a record $1,213.56 on June 25, the day after its fiscal third-quarter results. Then worries over how long AI spending could last took hold, and the stock fell more than 40% from that peak before turning higher in August. (It’s still up 350% over the past year.)
On Oct. 12, reports of progress at Chinese memory maker CXMT set off a two-day sell-off. Micron slid again before Thursday’s open, along with other AI chip stocks.
None of that shows up in Micron’s results: fiscal fourth-quarter revenue rose 379% to $54.2 billion.
Needham set its target at the top
Needham analyst Quinn Bolton raised his target to $1,650 in late June, just as the stock peaked. He valued Micron at 9x his fiscal 2028 earnings estimate of $184 a share. He reiterated the target on Oct. 1 and again on Thursday, when RBC Capital also stuck with its Buy and $1,500 target.
TIKR tracks 49 analysts on Micron. How many say “Buy”?
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Does $1,650 add up?
Most of Wall Street agrees. The consensus target has climbed from $206 a year ago to $1,561, its high for the year…
Needham’s target is a little above that, and well below D.A. Davidson’s Street-high $3,000.
Earnings estimates keep rising, too. Consensus for fiscal 2027 is $176.50 a share, up from $159.46 a month ago. Fiscal 2028’s is $206.85, well above the $184 Needham used in June…
Nothing in the recent selling should pull those down. Micron has already signed deals for most of its calendar 2027 HBM supply “with significant price increases year-over-year,” CEO Sanjay Mehrotra said on the fiscal fourth-quarter call.
Yet the stock trades at [5.2x] forward earnings, and Needham’s target works out to 9.4x.
At that price, investors are betting Micron’s profits fall once memory supply catches up. Management can’t see when DRAM supply and demand return to balance. It also puts its 26 multiyear take-or-pay customer deals at over 35% of its revenue through 2030. Even at those deals’ floor prices, CFO Mark Murphy said, “we expect margins meaningfully above any prior cycle peak margins.”
The numbers back Needham
The risk is the memory cycle itself: a faster ramp at CXMT or anyone else could pull prices, and last quarter’s 87% gross margin, back down.
Still, I’m with Needham. Estimates are rising, the consensus sits close to Needham’s target, and $1,650 is just 9.4x forward earnings.
The next test is fiscal first-quarter results in December, against guidance of $61.5 billion in revenue. Micron also plans to step up its capital return from Dec. 9. If it delivers on both, I’d expect the stock to start closing in on $1,650.
So what is Micron Technology stock actually worth?
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