Shares in AI memory chipmaker Micron (NASDAQ:MU) fell sharply in premarket trading Thursday after the company unveiled its earnings results for the fiscal Q3 2024. While the firm beat estimates on top and bottom lines, the stock fell as Q4 guidance fell short of higher expectations.
The stock was trading down 6% at the time of writing.
Citi analysts said the stock is in the red due to the company’s conservative guidance and higher capital expenditure numbers. Despite this, analysts said they would “buy MU on weakness as the DRAM upturn thesis remains intact and we expect sequentially higher revenue, EPS, and gross margins through C25.”
In line with this view, Citi reiterated a Buy rating and the price target of $175 on Micron stock and raised their earnings estimates for fiscal 2024. The Wall Street giant now sees 2024 earnings per share (EPS) estimates at $0.66, up from $0.52.
Analysts at JPMorgan voiced similar thoughts, saying they believe Micron is well-positioned to capture memory content on the strong AI and accelerated compute server deployments. They highlight that the company's HBM3e capacity is already sold out through the calendar year 2025 and that it is now beginning to gain visibility into demand for 2026.
“Gross margins for HBM3e and eSSD are both accretive to their respective segments and we believe that should structurally augment their profitability profile in combination with cyclical demand/supply related pricing increases,” JPMorgan’s team wrote.
“We believe the stock should continue to outperform through 2024 and into 2025 as the market continues to discount improving revenue/margin/earnings power,” they added in a Thursday note.
JPMorgan reiterated an Overweight rating on the stock and set a December 2025 price target of $180 as MU “continues to be one of our top picks in semis next year.”
