Morgan Stanley analyst Joseph Moore raised the price target on Micron Technology (NASDAQ: MU) to $1,200.00 (from $1,050.00) while maintaining a Overweight rating.

The analyst comments: “Good quarter/outlook, though the bigger debate is durability of these conditions and those aspects were also positive, as capex increases were modest, LTA disclosure was better than expected, though there are very clearly some tradeoffs between near term upside and durability, and execution in areas such as eSSD, HBM, and LPDDR5 SOCAMMs were all positive. We noted in our preview that the investor mindset seems to be much more that people are looking to add vs. the last two quarters where people were looking for reasons to sell, and the after hours reaction seemed consistent with that.

Micron announced the signing of 16 deals, typically 5 years with Auto shorter at 3 years. Those 16 deals in total amount to 20% of DRAM volume and 1/3rd of NAND volume between now and that 2030 timeframe. Pricing is either fixed, or operates with a ceiling and a floor. Prices at the ceiling are similar to CQ2 pricing, and floor pricing gives Micron a gross margin "well above" prior peak levels. Fourteen of those 16 deals amount to ~$100bn in RPO at minimum prices, and it's management's expectations that revenues will come in much higher. Of those 16 customers, there are four very large customers, three medium sized customers, and the other nine are smaller customers related to the auto industry. Once the company gets to their target level of SCA coverage, they expect it to be >50% of revenues, vs current deals closer to 25% or so.”