Micron Technology’s stock experienced a drop early Thursday after its margin outlook caught investors off guard. However, UBS believes that despite the surprise, investors should still consider betting on the stock. Micron’s shares were down 4.9% in premarket trading, but had been up by 36% throughout the year until Wednesday’s close. Analysts had become optimistic about the demand and supply balance for memory chips.
UBS analyst Timothy Arcuri noted that Micron’s guidance was not as positive as expected, pushing back the milestone for gross margins. Despite this, Arcuri believes that an upturn is in progress, with projections of a record year for memory-industry revenue in 2025. He reiterated a Buy rating and a target price of $76 for the stock, stating that demand, pricing, and profitability are all turning in a positive direction.
Micron has been facing challenges due to lower demand for DRAM and NAND chips in key markets such as PCs, mobile phones, and data centers. However, Arcuri mentioned that customers are making strategic purchases, indicating their anticipation of potential price increases by 2025. Overall, despite the recent drop in stock value, UBS remains bullish on Micron Technology.