BofA raises Micron rating and price target after earnings

Core Insights - Micron's stock has surged 215.97% year to date, with a significant boost following its fiscal Q1 2026 earnings report released on December 17, which contrasted with declines in Nvidia and Broadcom stocks despite their strong earnings [1] Financial Performance - Micron reported revenue of $13.64 billion for Q1 2026, up from $8.71 billion in the same period last year [7] - GAAP net income was $5.24 billion, translating to $4.60 per diluted share, while non-GAAP net income was $5.48 billion, or $4.78 per diluted share [7] - Operating cash flow reached $8.41 billion, compared to $3.24 billion for the same period last year [7] - The company provided guidance for Q2 with expected revenue of $18.70 billion ± $400 million, a gross margin of 67.0% ± 1.0%, and operating expenses of $1.56 billion ± $20 million [7] Analyst Ratings and Projections - Bank of America analysts raised Micron's stock price target from $250 to $300 and upgraded the rating to buy, based on a 2.3 multiple of the estimated price-to-book ratio for calendar year 2027 [9] - Pro forma EPS estimates for fiscal years 2026, 2027, and 2028 were increased by 62%, 80%, and 42%, reaching $31.84, $38.85, and $29.15 respectively [3] Market Outlook - Despite potential volatility in AI demand, the high-bandwidth memory (HBM) segment is sold out for the entirety of calendar year 2026, with customers engaged in multi-year agreements, suggesting a more sustainable upcycle for Micron compared to previous cycles [5] - Analysts noted that Micron faces risks such as a decline in average selling prices, increased competition from new entrants in China, and potential softening demand across major end markets like data centers, smartphones, and PCs [8][9]