Susquehanna lifts Micron stock target to $2,000 after record-breaking quarter

Investing.com -- Susquehanna hiked its price target on Micron Technology to $2,000 from $1,750, the highest on Wall Street, after the memory chipmaker posted record-breaking fiscal third-quarter results and guidance that blew past consensus expectations.

Micron reported revenue of $41.46 billion and adjusted EPS of $25.11 for the quarter, well above consensus estimates of $35.91 billion and $20.86. Gross margin of 84.9% also surpassed expectations of 80.8%.

For the current quarter, Micron guided for revenue of around $50 billion and EPS of approximately $31, again comfortably above what analysts had pencilled in.

The upgrade was driven in large part by Micron’s 16 signed strategic customer agreements (SCAs) — non-cancellable, take-or-pay contracts running typically five years — which analysts see as a structural shift in how the company generates earnings.

The agreements cover roughly one-fifth of DRAM bits and one-third of NAND bits, and when fully executed, Micron expects more than half of total revenues to fall under such contracts.

Crucially, the deals include price floors that lock in gross margins well above any prior-cycle peak, even in a downturn scenario. Susquehanna said it now expects Micron to generate free cash flow (FCF) in excess of $110 billion in fiscal 2027 (FY27), the bulk of which should flow to shareholders.

Micron’s DRAM revenue more than tripled year-on-year to $31.3 billion, while the company said HBM4 is ramping at twice the pace of the prior generation, with customer commitments extending into 2028 and beyond.

NAND revenue nearly quadrupled to $9.9 billion, with data centre SSD revenue exceeding $5 billion in the quarter alone.

The chipmaker now sees the HBM total addressable market (TAM) crossing $100 billion in 2027, a year earlier than previously expected.

Susquehanna, which already had estimates well above consensus, raised them further and now projects annualised EPS potentially reaching $200 as Micron exits FY27.

You May Also Be Interested In

• HBM prices could double by 2027 on surging AI demand, DigiTimes reports
• TD Cowen Reiterates Buy Rating on Micron Technology (MU)
• Baird on Nurix (NRIX) Earnings Amid 7% Drop: '2Q Print Solid as Breadth of Development Expands'