Micron Technology (MU) Gets Major Price Target Raise as Strategic Contracts Strengthen Outlook

Micron's increasing basal of Strategic Customer Agreements (SCAs) has had Wall Street bullish connected the Micron Technology. Recently, connected June 25, JPMorgan expert Harlan Sur raised the terms people connected the banal to $1,540.00 (from $550.00) portion maintaining an "Overweight" rating.

The steadfast believes that Micron's enlargement from a azygous 5-year contract, which was announced past quarter, to 16 signed agreements, whitethorn connection meaningful extortion to its revenues and margins. Instead of operating arsenic a cyclical commodity producer, the institution could go a much unchangeable supplier with multi-year contracts.

Commenting connected its latest quarterly results, the steadfast noted however May 4th gross of 41.5 cardinal bushed Street statement estimates of $35.6 billion. Meanwhile, gross margins reached an all-time precocious of 84.9%.

Source: Micron Technology

Both DRAM and NAND mean selling prices accrued 63% and 87% respectively arsenic proviso remained structurally constrained. Looking ahead, Micron has guided for an estimated $50 cardinal successful August 4th revenue. While the complaint of terms summation is expected to dilatory down, the steadfast believes that MU's already achieved prices volition apt stay unchangeable owed to the SCA structure.

Critically, the 14 of 16 SCAs with defined terms bands collectively correspond ~$100B of cumulative gross astatine level pricing (i.e. minimum committed), with mgmt explicit that the floor-price gross margins are "well supra highest margins successful immoderate past cycle" (vs. past rhythm highest GM of ~62%), efficaciously establishing a higher and much durable borderline level than astatine immoderate clip successful MU's history. Customer committedness is besides reflected successful $22B of currency deposits and related fiscal commitments (of which $18B is unrestricted cash; ~$10B to beryllium received successful F4Q26 alone), which beryllium connected MU's B/S during the declaration term.

Micron Technology, Inc. (NASDAQ:MU) develops and sells representation and retention products for information centers, mobile devices, and assorted industries worldwide.

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