One Wall Street Analyst Believes 21% Upside to Micron Technology Stock

Micron Technology Inc.firms(NASDAQ resonance code: MU)The company's shares have soared to new highs this year as the memory chip leader is on the verge of resuming profitable growth.CitiThe stock still has room to rise, according to analyst Dr. Christopher Danely.

After speaking with the company's management team, the analyst maintained a Buy rating on Micron's stock, with a $150 price target, which would represent a 21% upside from Friday's closing price of $123.58.

Why Buy Micron Stock

Micron is one of the leading suppliers of Dynamic Random Access Memory (DRAM) and Solid State Storage for computers, smartphones and data centers. Due to cyclicality, revenues from these products fluctuate significantly every few years, and you can see the downward trend since 2022.

However, Micron is beginning to experience a recovery, which could lead to significant revenue growth in the coming years.

Demand for artificial intelligence (AI) servers has been "exceptionally strong," Koon said in its most recent financial report. The uptick in demand has helped tighten supply and drive up the price of memory chips. The company's revenues for the second quarter of its fiscal year 2024 (which ended Feb. 29) rose 58% year-on-year.

Looking ahead to fiscal 2026 earnings estimates, the company's shares trade at a modest forward price-to-earnings ratio of 12. That's not a cheap valuation for a company in a cyclical industry, but Koon believes that record revenues in fiscal 2025 could push the stock above analysts' price targets.

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A Wall Street Analyst Says Micron Technology Stock Has 21% Upside was originally published by The Motley Fool.