Micron Technology Inc (NASDAQ:MU) is positioned to benefit from stronger-than-expected memory pricing trends as it prepares to report fiscal third-quarter results, according to Wedbush analysts, who raised their estimates and price target ahead of the release.
Wedbush reiterated its ‘Outperform’ rating on Micron and increased its price target to $1,300 from $550, citing higher assumptions for DRAM and NAND pricing as well as expectations for continued demand tied to artificial intelligence applications. Shares closed on Thursday at $1,152.
The analysts wrote that pricing for both NAND and DRAM in the second calendar quarter increased by "high double to even triple digits," exceeding the assumptions Micron used in its prior guidance. Wedbush now models a 65% quarter-over-quarter increase in average selling prices for both DRAM and NAND in Micron's fiscal third quarter, up from its previous estimate of 40%.
The firm wrote that DRAM pricing could prove stronger still, noting its industry checks suggest Micron may have realized pricing gains in line with, or slightly better than, broader market trends. Wedbush added that Micron may benefit from a larger sequential increase in average selling prices because the company had set contract pricing earlier in the quarter at levels below those of some Korean competitors.
Wedbush raised its fiscal third quarter revenue and earnings-per-share estimates and wrote that, despite its forecasts being near the top end of consensus expectations, Micron still has room to outperform, with DRAM pricing remaining the most significant factor influencing earnings.
Looking ahead to Micron's fiscal fourth quarter, Wedbush expects further gains, modeling an approximately 20% increase in DRAM and NAND pricing during the third calendar quarter. The analysts wrote that pricing for registered DIMMs in secondary markets climbed through May and that an improving mix toward higher-value server memory modules could provide additional upside.
Wedbush also maintained a positive longer-term outlook, writing that demand related to AI is likely to remain robust through at least 2027, while supply conditions appear unlikely to lead to oversupply over the next 18 months. The analysts added that new long-term agreements could help sustain elevated earnings levels for longer than in previous memory cycles.