UBS Maintains 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).

“MU delivered solid guidance but as we have said many times, this story is now more about duration, the fundamental value of memory in an AI inference world, and capital return.

Speaking to duration, MU is now calling for industry DRAM bit growth to decelerate in C2027 with no acceleration in supply even in C2028 given the sheer duration that it takes to bring new supply online (partially we think due to SPE lead times) together with ongoing supply headwinds from HBM migration (which soaks up supply).

To this end, customers are now extending supply agreements into C2031 and we think these agreements will prove more durable than many investors fear because most are set in a way that would require pricing to go down well over 70% for customers to consider walking away – a development that would probably take into C2030 to happen, if at all.

Speaking to capital return, we were not sure we would get much incremental disclosure, but MU “led the horse to water” enough by saying it will be at target cash by FQ1 and will work to return all excess cash from that point.”

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