Micron Stock Falls but Analysts Are Bullish Despite Gross Margin ‘Fly in the Ointment’

Key Takeaways

Shares of Micron Technology (

MU

) turned lower Friday after
the company’s fiscal second-quarter results
a day earlier, but analysts have remained bullish on the memory chip company.

Micron “has established technology leadership in [high-bandwith memory],” UBS analysts said after the results, and its DRAM chip business “should operate with more sustained supply/demand dynamics as long as
AI
continues to grow.” The bank maintained its “buy” rating and $130 price target.

Despite
initially rising
after the results were released, Micron shares dropped around 8% intraday Friday. The chipmaker’s revenue and profit forecast came in above Wall Street’s expectations, but UBS said the company’s commentary on
gross margins
was “a bit of a fly in the ointment.”

Citi analysts also reiterated a “buy” rating but trimmed their price target from $150 to $120 “given Micron’s persistent gross margin issues.” The bank raised its full-year sales and
earnings per share
estimates, driven by expected improvements in the DRAM market. Meanwhile, Wedbush raised its price target to $130 from $125, and Bank of America stood pat at $110.

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