Wed, April 17, 2024

Micron’s Shares Hit $127.38, Up 53% in AI Surge

micron

Quick Look:

  • Micron’s stock hit a record high of $127.38, a 53% gain YTD, fueled by the AI sector growth.
  • Bank of America raises the company’s price target to $144, citing potential in HBM chip technology.
  • Analyst consensus rates Micron a ‘Strong Buy’, with an average price target of $129.96.
  • According to insider sales, institutional investments show strong confidence.
  • Q1 financials beat expectations; a dividend payment is incoming despite a challenging payout ratio.

Micron Technology’s shares reached a new record high on Monday, closing at $127.38. That makes a significant leap from the previous close of $117.89. This milestone represents a 53% year-to-date gain, propelled by the semiconductor sector’s expanding role in the burgeoning AI market.

Analysts Target $144 Amid AI Growth

A notable revision in price targets from industry analysts has further bolstered the optimistic outlook for Micron. Bank of America and its analyst Vivek Arya elevated their price target for the company to $144, maintaining a ‘Buy’ rating. The revision lies in the potential gains from the AI boom and the tech giant’s advancements in high-bandwidth memory (HBM) production.

Arya highlighted the significant growth potential of the HBM chip technology. The markexpectsing to soar at a compound annual growth rate (CAGR) of 48% by 2027. Therefore potentially surpassing $20 billion. The company’s strategic positioning to increase its market share from less than 5% to mid-20% in this space is a critical driver. This expansion is coupled with the increasing adoption of AI technology in higher-spec devices, underpinning the bullish outlook for Micron’s stock.

Wall Street Eyes Micron with ‘Strong Buy’ Rating

The sentiment across Wall Street remains highly optimistic, with a consensus rating of ‘Strong Buy’ based on 25 ‘Buy’ ratings, one ‘Hold’, and one ‘Sell’. The average price target among analysts is $129.96, indicating a modest implied upside of 2.14%.

Other analysts, including those from UBS Group, Goldman Sachs Group, Piper Sandler, Robert W. Baird, and Cantor Fitzgerald, have also issued favourable ratings, with price targets ranging from $97 to $130, reinforcing the positive market sentiment towards Micron.

Micron’s Insider Sales and Bullish Institutions

Despite the stock’s remarkable performance, there has been notable insider activity, with CEO Sanjay Mehrotra selling 7,000 shares at $82.13 earlier in the year. This was followed by EVP April S Arnzen’s sale of 4,890 shares at $119.30. On the institutional front, entities such as Northern Trust Corp, L2 Asset Management LLC, Invesco Ltd., Merlin Capital Inc, and Amitell Capital Pte Ltd have made significant investments, showcasing strong institutional confidence in Micron’s future.

Micron Beats EPS, Announces $0.46 Dividend

Micron’s first-quarter financial performance exceeded expectations, with an EPS of $0.42 against a consensus estimate of -$0.27 and a revenue of $5.82 billion, significantly above the $5.35 billion forecast. This represents a year-over-year revenue growth of 57.7%.

Additionally, the company has announced its next dividend payment for April 16th, with an annualized rate of $0.46, yielding 0.37%. Despite a challenging payout ratio of -13.33%, the dividend announcement underscores Micron’s commitment to returning value to its shareholders.

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