UBS Keeps Buy on Micron, $1,625 Price Target
UBS analyst Timothy Arcuri reiterated a Buy rating and $1,625 price target on Micron Technology (NASDAQ: MU).
“While the stock remains a battleground between momentum and duration, fundamentals continue to improve with our latest round of checks pointing to a gap between supply and demand that continues to widen into C2027.
Specifically, we still see DRAM fulfillment remaining in the ~60% range and server DDR bit demand growth of ~80% Y/Y, and server+storage SSD bit demand growth of potentially >100% Y/Y in C2027.
Ergo, with MU having already provided details on LTAs and these agreements starting to mute upside to the numbers, the investor focus should be on durability of demand and especially capital return.
On the latter, the limits on share repo related to CHIPS Act come off as of 12/9/26, and we do see quarterly repo starting in the ~$20B range in FQ2:27 (Feb) and ramping quickly to $40-50B/Q, but the company probably doesn’t want to front-run itself.
Ergo, we are not sure we get a whole lot new in terms of share repo on this call.
For FQ4:26 (Aug), we see revenue ~$52B (a bit above high-end) with GM in the ~87.6% range (~160bps above guidance) and expect FQ1 revenue to be guided to ~$58-59B and GM up ~100bps.
Net, we are pushing numbers up yet again – due mostly to more duration and bigger share repo – with C2027/28/29E EPS now ~ $212/$277/$219, all well north of current Street numbers.
Given all of the share repo, we think TBV/share exits C2028 at ~$360 and even assuming ~80% decline in open market pricing on the other side of the cycle (starting in C2H:28), we think trough annualized EPS will still be HIGHER than where MU will likely guide annualized EPS next Q – a very powerful statement and one that we think the market will ultimately reward.
We maintain our $1,625 PT which is only ~8x NTM P/E applied to our C2029E EPS of ~ $219 (discounted back 1yr), also supported by ~4.5x TBV/share exiting C2028E. We reiterate our Buy rating.”
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