Micron Technology (MU) stock delivered another strong earnings beat with income totaling $37.7 billion, but investors were hardly rushing to celebrate. Nonetheless, Rosenblatt’s five-star analyst, Kevin Casidy, saw enough to raise his stock price target while maintaining his Buy rating.
The memory chipmaker reported fiscal Q4 results after the market closed on September 30, beating Wall Street’s profit and revenue expectations and offering a stronger-than-expected sales outlook. For perspective, per Seeking Alpha, it has exceeded estimates on both lines over the past four consecutive quarters.
Shares initially edged higher before slipping in Thursday’s premarket trading. That muted response captures the challenge facing one of the AI boom’s biggest winners.
Micron shares had surged more than 273% this year, according to Seeking Alpha. Delivering strong numbers is one thing. Convincing investors that the next chapter deserves a higher valuation is another.
Cassidy’s revised forecast suggests he sees more room ahead.
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Micron earnings at a glance
- Q4 revenue: $54.23 billion, up from $41.46 billion in the previous quarter and $11.32 billion a year earlier.
- Earnings: Adjusted profit reached $33.42 per share, versus $3.03 last year. GAAP net income totaled $37.70 billion.
- Profitability: Adjusted gross margin climbed to 87%, compared with 84.9% in the preceding quarter.
- Cash generation: Quarterly operating cash flow reached $43.97 billion; adjusted free cash flow totaled $33.20 billion.
- Full-year revenue: Fiscal 2026 sales reached $133.19 billion, versus $37.38 billion the previous year.
- Q1 guidance: Revenue of $60 billion to $63 billion; adjusted earnings of $37.15 to $39.15 per share.
- Margin outlook: Approximately 86.25% adjusted gross margin.
- CEO Sanjay Mehrotra said: “Micron delivered record fiscal 2026 results, and we expect an even stronger fiscal 2027.”
- Source: Micron Investor Relations, September 30, 2026 earnings release and coverage from Noah Weidner (TheStreet).
Rosenblatt’s $1,900 Micron target rests on a longer memory boom
Rosenblatt analyst Kevin Cassidy just raised his Micron price target to $1,900 from $1,500, a strong 27% increase, while maintaining a Buy rating as reported by TheFly.
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His argument extends beyond the earnings beat, where he feels that constrained supply will continue to keep pricing strong enough to fund expansion and substantial shareholder returns.
Cassidy called the results an “anticipated beat-and-raise quarter,” backed up by robust demand and higher average selling prices.
What surprised him was the outlook for slower industry DRAM bit growth. Micron expects growth in the low-20% range during 2027 and 2028, versus the mid-20% range in 2026.
That measures memory capacity produced, rather than revenue. Slower supply growth can support prices when demand remains strong.
The complication is high-bandwidth memory, or HBM. Its more complex production makes expanding supply harder, potentially prolonging favorable conditions for suppliers. Cassidy also highlighted 10 additional Strategic Customer Agreements. These strengthen visibility into future business, supporting his confidence in Micron’s financial durability.
He expects gross margin expansion through fiscal 2027, although Micron’s Q1 guidance implies an initial decline from the fourth quarter’s 87% adjusted margin.
Spending is rising, too. Fiscal 2027 capital expenditure should exceed $50 billion, above Cassidy’s previous $45 billion estimate, with cleanroom construction supporting capacity in fiscal 2028 and 2029.
Yet Cassidy forecasts more than $100 billion in fiscal 2027 free cash flow. He interprets management’s comments as pointing toward significant buybacks, although no capital return target was specified.
The investment case hinges on scarcity lasting while Micron builds capacity. If demand softens sooner, both pricing and cash returns become vulnerable.
Wall Street price targets for Micron stock after Q4 earnings
- UBS: $1,625, Buy reiterated October 1.
- Deutsche Bank: $1,550, Buy reiterated October 1.
- JPMorgan: $1,540, Overweight reiterated October 1.
- Wells Fargo: $1,400, Overweight reiterated October 1.
- Citi: $1,300, Buy reiterated October 1.
- Source: MarketWatch.
Micron looks cheap, but pricing must deliver
For starters, Micron’s valuation setup is compelling.
Seeking Alpha’s valuation snapshot puts the stock at 6.6 times forward adjusted earnings, versus a sector median of 23.3 times. That discount offers potential upside if today’s exceptional profits prove durable.
But investors should ask what those earnings depend on. Memory shortages support higher prices, and CEO Sanjay Mehrotra said Micron’s contracted 2027 high-bandwidth memory business carries prices “much higher than 2026 prices.”
That strengthens the case for sustained profitability. Mehrotra added that “more than 75% of our output is already committed.” Committed volume improves visibility, although it does not guarantee every future sales dollar or margin.
The valuation also looks less forgiving through another lens. Micron’s 12.57 times trailing enterprise value to sales exceeds its five-year average of 5.31 times, which suggests that cheap earnings multiples can flatter cyclical businesses when profits are unusually high.
CFO Mark Murphy offered another potential catalyst: “we have the ability and the intent to increase our capital return.”
For investors, consider building a position gradually. It’s imperative to monitor whether stronger pricing supports margins, contracts generate cash, and buyback commitments materialize alongside heavy capital spending. Those developments would give the bargain argument firmer backing.
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