Investing.com -- Wolfe Research analysts cut their price target on Micron Technology (NASDAQ:MU) shares to reflect the recent management’s commentary that pointed to short-term headwinds. The new price objective is now set at $150, down from $175 previously.
The reduction comes after Micron's participation in the Wolfe Auto, Auto Tech, and Semiconductor Conference, where the company highlighted greater pricing pressure and unfavorable mix shifts affecting its near-term (NT) outlook.
Micron also guided for a “few hundred” basis points (bps) of gross margins (GM) decline quarter over quarter, but projected that the fiscal third quarter would mark the low point for GMs.
Looking beyond the near-term challenges, Wolfe Research projects a recovery in the second half (2H) of the year, citing “improved inventory levels across PC/smartphone and continued growth in high bandwidth memory (HBM) shipments.”
“We have also adjusted our memory model to reflect greater NT pricing headwinds in both DRAM/NAND; however, our expectations for CY25 DRAM remain largely unchanged - we still anticipate a 2H commodity DRAM recovery driven by AI futureproofing in consumer devices,” analysts led by Chris Caso noted.
Wolfe's analysis also includes the impact of additional supply cuts from major NAND suppliers, which have been seen as positive for near-term NAND pricing and revenue outlook.
Still, concerns persist about the NAND market structure, particularly regarding Samsung's (KS:005930) strategy of pursuing technology migration while also cutting production, which could lead to market oversupply.
“While NAND production cuts are helping NT pricing, we're concerned that Samsung is adding capacity and cutting production simultaneously,” Caso said.
Alongside the price target cut, Wolfe also adjusted its estimates. The firm’s fiscal year 2026 estimates now assume approximately $12 in earnings power on about $45.2 billion in revenue, which is above the Street's consensus of roughly $44.0 billion in revenue and $11.07 in earnings.
It expects Micron to achieve significant market share in the HBM market by the fourth quarter of 2025 and throughout 2026, contributing to the company's revenue.
Despite near-term concerns, Micron remains “one of our favorite ideas in semis,” analysts said, with the stock trading at around 6.6x their estimated CY26 earnings per share of $13.50, compared to its typical 10x multiple.
