Shares of Micron Technology (MU 0.57%) rallied on Monday, jumping as much as 4.1%. As of 12:52 p.m. ET, the stock was still up 1.5%.
The catalyst that sent the memory and storage chipmaker higher was a vote of confidence from a pair of Wall Street analysts.
Exposure to AI
Barclays analyst Tom O’Malley maintained his buy rating on the stock while increasing his price target to $120. That suggests potential upside of roughly 29% compared to Friday’s closing price — and on top of the stock’s 68% gains over the past year. The analyst expects “another strong beat and raise” from Micron, driven by improved pricing power for the processors used for dynamic random access memory (DRAM). “Beat and raise” is Wall Street parlance for results that beat analysts’ consensus estimates, accompanied by an increase in the company’s forward-looking guidance.
Cantor Fitzgerald analyst C.J. Muse was equally bullish, also increasing his price target to $120. The analyst also cited expectations for a beat-and-raise quarter from Micron when the company reports Wednesday after the market close. While the stock could be volatile over the next few months, he expects the company’s exposure to artificial intelligence (AI) to pay off over the long term.
To buy or not to buy?
As a reminder, Micron Technology’s management previously stated that improving demand and the “current pricing trajectory” for the company’s DRAM and NAND flash memory has “improved our financial outlook for the second quarter and full fiscal year.”
As a result, the company has forecast revenue of $5.3 billion, which would represent growth of roughly 43% at the midpoint of its guidance, resulting in an adjusted loss per share of $0.07, improved from a loss per share of $1.91 in the prior-year quarter.
Management was also quick to note that any gains this year would be the result of improved pricing, though it expects unit shipments to decline.
Investors should keep an eye on what management has to say when Micron Technologies reports its results on Wednesday.
Danny Vena has no position in any of the stocks mentioned. The Motley Fool recommends Barclays Plc. The Motley Fool has a disclosure policy.
