BofA sees upside in Micron stock with increased HBM market share By Investing.com

On Thursday, BofA Securities updated its outlook on Micron Technology (NASDAQ:MU) stock, raising the price target to $125 from the previous $110, while reaffirming a Buy rating.

The revision follows Micron’s performance, which has been bolstered by robust data center demand, especially with the growth in sales of high-bandwidth memory (HBM) leveraged by artificial intelligence.

Micron’s recent financial results surpassed expectations, even amidst broader macroeconomic challenges like declining demand for PCs and smartphones.

The company’s management has projected a record fiscal year 2025, increasing the total addressable market (TAM) for HBM to over $25 billion from $20 billion. This upgrade is supported by strong pricing and market share visibility.

Additionally, Micron’s gross margins for the fourth fiscal quarter and the first quarter were notably higher than anticipated, coming in at 36.5% and 39.5% respectively, compared to the consensus estimates of 34.6% and 37.8%.

Despite an anticipated softer second fiscal quarter due to seasonality, BofA Securities has increased its fiscal year 2025 and 2026 earnings estimates for Micron by 22% and 31%, to $7.18 and $9.87 per share respectively.

The new price objective reflects a price-to-book multiple of 2.5 times the calendar year 2025 estimates, an increase from the previous 2.2 times, while remaining within Micron’s historical range of 0.8 to 3.1 times.

BofA Securities forecasts that Micron’s HBM sales could reach $4 billion in the calendar year 2025, which would give the company approximately a 16% share of the market. There is potential for an even higher market share, possibly over 20% or $5 billion, if the HBM segment continues to be dominated by only Micron and Hynix.

The firm also notes that Micron’s strength in the data center sector is a positive indicator for other companies in the industry, including Nvidia (NASDAQ:), Broadcom (NASDAQ:), Marvell Technology (NASDAQ:), Advanced Micro Devices (NASDAQ:), and KLA Corporation (KLAC), as well as the broader semiconductor capital equipment sector.

In other recent news, Micron Technology Inc (NASDAQ:). has projected an optimistic revenue forecast for the first quarter, surpassing market expectations due to robust demand for its high bandwidth memory (HBM) chips. The company has projected revenues to be around $8.70 billion, higher than analyst estimates of $8.28 billion.

However, CFRA, a financial research firm, has adjusted its outlook on Micron, reducing the stock’s price target from $170 to $140, while maintaining a Buy rating. The firm expects a gross margin of 34.5% for the same period and forecasts revenue of $8.3 billion for the November quarter.

Likewise, Rosenblatt Securities maintained a Buy rating on Micron with a steady price target of $225.00, despite potential pressures on average selling prices. TD Cowen also maintained a Buy rating on Micron but reduced the price target from $160.00 to $115.00, citing the current negative sentiment and stable long-term fundamentals.

Stifel adjusted its price target for Micron to $135, down from $165, but maintained a Buy rating. This adjustment comes as Micron prepares to release its fiscal fourth quarter earnings report.

Despite these adjustments, Micron has launched its Crucial P310 2280 Gen4 NVMe solid-state drive (SSD), which promises double the performance of Gen3 SSDs and a 40% speed increase over its predecessor.

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