Citi analyst Christopher Danely raised his target for the stock price before Micron revised its financial forecasts.
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Micron Technology shares have extended their recent run, after the company boosted its financial forecasts for its fiscal second quarter, which ends Thursday.
The move follows weeks of upgrades by Wall Street analysts to their earnings forecasts as the outlook for demand and prices for both DRAM and NAND memory chips improves.
For the quarter, Micron (ticker: MU) now sees revenue of $6.2 billion to $6.25 billion, up from a previous forecast of $5.6 billion to $6 billion. The company expects adjusted profits for the quarter of between 93 cents and 98 cents a share, up from a previous estimate of 68 to 82 cents. Under generally accepted accounting principles, Micron now projects 51 to 56 cents a share, up from a previous estimate of 34 to 48 cents.
Micron increased its forecast for non-GAAP gross margin in the quarter to a range of 32% to 33%, from a previous forecast of 30% to 32%. On a GAAP basis, the chip maker now sees gross margin of 26% to 27%, up from a previous call for 24% to 26%.
The updated guidance precedes an appearance Wednesday morning by Micron CFO David Zinsner at a virtual technology conference hosted by Morgan Stanley.
Ahead of the company’s announcement, Citi analyst Christopher Danely repeated his Buy rating and “Top Pick” designation on the stock, while boosting his price target to $116 from $113. He repeated a previous forecast that the company in the current cycle should be able to exceed $15 a share in annual earnings, which he thinks could drive the stock as high as $150.
Danley notes that DRAM contract pricing is up about 6% year to date, above his previous estimate of 4%, due to strong demand. He estimates that DRAM accounts for about two-thirds of the company’s revenue.
“We expect upside to both DRAM pricing and Micron estimates all year given our belief in an upturn,” he writes in a research note. The analyst estimates that for calendar 2021, DRAM average pricing will increase 9%, above his previous forecast for a 7% increase.
Micron stock was up 1.8%, to $92.73 on Wednesday morning. The stock has rallied 23% since the end of 2020, and has nearly doubled since the end of September.
Write to Eric J. Savitz at [email protected]
