Micron Technology Inc (NASDAQ:MU) saw its price target raised to $500 by Wedbush analysts, who cited memory industry pricing trends as the main driver behind the upgrade.
The analysts also reiterated their ‘Outperform’ rating on the stock, which traded hands at about $422 on Friday afternoon.
"Industry pricing is clearly better than MU guided," the analysts noted. While Micron had initially projected roughly 30% average selling price (ASP) gains for its fiscal second quarter, Wedbush highlighted that first-quarter contract pricing for DRAM and NAND appeared "well ahead of expectations," with some contracts even approaching triple-digit gains.
The firm also pointed to continued momentum in the second quarter. "The setup for CQ2 seems more positive than our previous expectations that both NAND and DRAM would likely climb in the 30% to 50% range,” the analysts wrote.
Wedbush further observed that conversations with industry participants after the Lunar New Year did not indicate any slowdown, instead showing "continued lift in requirements and even tighter supply dynamics."
Despite the optimism, Wedbush acknowledged some uncertainties in modeling the impact on Micron’s financial results. The analysts are "less clear around how exactly MU's contract PX compares to industry trends, the timing of when exactly higher prices will hit MU's income statement, and how aggressive management will be in providing a fiscal Q3 guide." As a result, the firm assumed a 40% increase in fiscal second-quarter pricing and a 25% increase in fiscal third-quarter results.
Wedbush concluded that, with Micron trading below what it considers typical peak earnings multiples, there is no reason to change its positive outlook.
"Our new $500 price target is calculated by applying a 5X multiple to our new financial year 2027 EPS estimates and adding in net cash," they wrote, noting that a mid-single-digit multiple applied to peak earnings aligns with valuation metrics seen during past memory cycles.