The stock of semiconductor memory chipmaker — including for artificial intelligence (AI) server farms — Micron Technology (MU 4.41%) is hopping Thursday morning, up a solid 4.4% through 10:55 a.m. ET.
And you can thank the friendly analysts at Mizuho for that.
Image source: Getty Images.
What Mizuho says about Micron
Mizuho raised its price target on Micron stock yesterday after close of trading, reports The Fly, to $130 per share, with an outperform rating. Looking ahead to Micron’s fiscal Q2 2025 earnings report, which is expected June 25, Mizuho expects to see strong guidance based on a couple of big numbers.
Global sales of high bandwidth memory (HBM) are expected to grow 55% industrywide through 2027, while Micron’s sales of HBM are expected to grow 90% annually.
That means not only is Micron growing much faster than other memory makers, but it’s also probably stealing a lot of market share from its rivals — both things being great news for Micron stock, if they’re correct. The analyst expects this to translate into both sales growth and “margin upside.”
Is Micron stock a buy?
One hopes that Mizuho’s right about that, because as things stand right now, Micron stock doesn’t look terribly attractive. Earnings for the past 12 months are only $4.7 billion, giving the stock about a 25x P/E ratio — not obscenely expensive, but certainly not “cheap.”
Free cash flow at the memory maker is even worse, just $606 million for the past year, resulting in a price-to-free cash flow ratio of… 190! (Which does seem kind of obscene.) Still, Micron’s a cyclical stock in the famously cyclical semiconductor industry, where “cheap” stocks can become “expensive,” and vice versa, in the blink of an eye.
The best time to buy such stocks can be when their valuations look the worst — like today.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
