Morgan Stanley reiterates Overweight on Micron stock, $1,200 target

Morgan Stanley has maintained an Overweight rating and set a price target of $1,200 for Micron Technology (NASDAQ: MU). The investment firm highlighted Micron's strong performance over the past three quarters, with the company beating earnings per share expectations by 20-40% in each period. Notably, Micron's recent quarter saw a 5% beat relative to consensus, with guidance that exceeded expectations by 6%.

The stock has surged 486% over the past year, reaching its current price of $1,065. Analysts have revised their earnings estimates upwards for the upcoming period, with 12 analysts specifically adjusting their projections. Micron has also signed 10 new supply chain agreement customers and is extending some contracts beyond 2030, a reflection of customers' concerns about ensuring a steady supply of DRAM.

The company's cloud memory business unit, representing one-third of Micron's revenue, carries the lowest gross margin at 83% due to HBM contracts signed when DRAM pricing was lower. Despite this, Micron anticipates a 20% year-over-year growth in bit shipments next year as wafer additions across the three major DRAM suppliers and CXMT are expected.

Morgan Stanley projects slower bit growth overall, citing increased capital expenditures. The investment firm's financial analysis suggests Micron remains undervalued at its current price, earning an EXCELLENT financial health score.