RBC Capital Keeps Outperform on Micron, $1,500 Price Target
RBC Capital analyst Srini Pajjuri reiterated an Outperform rating and $1,500 price target on Micron Technology (NASDAQ: MU).
“MU’s results and outlook were slightly ahead of our recent expectations.
Management sees supply-demand conditions getting even tighter in CY27/28, likely due to stronger demand and diminishing process migration benefits in DRAM.
The company signed additional long term agreements and now has 26 SCAs covering >35% of revenue through 2030. On the other hand, FQ1 gross margin outlook is slightly impacted by higher compensation costs although expected to improve starting in FQ2.
Commentary points to management looking to return a majority of the FCF through buybacks after cash position reaches its target in FQ1 (we project ~$130b FCF from 2QF27 – 1QF28).
We raise estimates and at ~6.5x FY27E EPS, we believe valuation is barely giving credit to floor pricing agreements, leaving room for sizable multiple expansion even if SCAs are partially effective.”
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