Last-minute thought: JP Morgan comments on Micron shares ahead of earnings announcement

Micron (NASDAQ: MU) will announce its fourth-quarter (August quarter) results as soon as the trading session closes today. The company has been battling a sluggish DRAM market, largely due to oversupply, which led some Wall Street analysts to be cautious ahead of the announcement.

Harlan Sur of JP Morgan, a 5-star analyst who is among the top 1% of Wall Street stock market experts, does not expect any major events today, but does not predict a catastrophe either.

“We expect the team to deliver results/forecasts consistent with recently lowered consensus estimates for weakness in DRAM standards (PC/smartphones/consumer) in the second half of the calendar year, partially offset by strong AI/server demand,” Sur noted. In fact, Sur expects revenue, GMs and EPS for the August quarter to be “slightly better than consensus estimates.”

The real concern on Wall Street is the November quarter forecast. Consensus expectations have already been revised downward, and Sur believes the forecast will likely be in line with current analyst forecasts. Still, the analyst remains optimistic about Micron's future, expecting “sustained DRAM/NAND Q/Q price increases and GM increases in calendar year '24 and into calendar year '25, as well as strong visibility on HBM bit shipments/pricing (which begins to extend into calendar year '26).”

In addition, Sur believes the storage industry is “still in the early stages of the up cycle.” The cycle typically includes 6 to 8 quarters of positive EPS revisions, and currently we are only three quarters in. During this time, EPS estimates are generally pushed up by two to three times, and storage stocks tend to rise in line with these positive EPS revisions.

“In fact,” the 5-star analyst continued, “we and our global memory team expect Q/Q mixed price improvement for DRAM through mid-2026, while NAND price strength should continue through 2025.”

However, there is a big difference between this boom and previous booms. AI-driven demand for HBM DRAM has not only emerged as a new driver in the industry (it is expected to consume 20-25% of total DRAM industry capacity by 2025), but it is also “the fastest-growing new memory driver in the history of the memory market.”

So should investors consider buying some MU shares ahead of the announcement? Yes, seems to be Sur's conclusion, who rates the stock as Overweight (i.e. Buy) with a $180 price target. There's plenty of upside potential — 87.7%, to be exact — if the target is met over the next 12 months. (To watch Sur's track record, click here)

23 other analysts agree with Sur's bullish stance, and they are faced with just a Hold and Sell rating each, all of which culminate in a consensus rating of Strong Buy. Based on the average price target of $151.54, investors will earn a 58% return in one year. (See Micron Stock Forecast)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important that you conduct your own analysis before investing.