Micron analyst day highlights margin strength, revenue growth, Citi says
Micron Technology (NASDAQ:MU) held its analyst day on Thursday and the company said it expects to hit "high single-digit revenue growth" and 30% operating margin targets, with investment firm Citi noting that should help boost earnings significantly.
Analyst Christopher Danely, who reiterated a buy rating and a per-share price target of $120 on Micron (MU), noted that in a "normalized" cycle, a 30% operating margin and high single-digit revenue growth would equate to $7.75 per share in earnings.
"While Micron committed to the 30% normalized operating margin, it wouldnât state if it could get back to previous peak margins of roughly 60% gross and 50% operating, although we believe a strong DRAM upturn would make it likely," Danely wrote in a note to clients.
Micron (MU) shares rose more than 2% to $69.24 in premarket trading on Friday.
In addition, Micron (MU) said it expects the dynamic random access memory market, or DRAM, demand to grow at a compound annual growth rate in the mid to high-teens, which is below the historical rate of 25%. In conjunction, Micron (MU) expects DRAM capacity to grow "in line with those expectations."
In a separate note, Citi analyst Peter Lee noted that demand for memory has "turned bearish" citing the continued Covid-related lockdowns in China, geopolitical issues, namely Russia's invasion of Ukraine and rising interest rates.
"However, we expect mobile demand to recover in [second-half] based on our industry checks that Apple (AAPL) has started to negotiate the volume and price of mobile DRAM with memory makers, and China smartphone makers have also started to order rigid OLED panels from Korean display makers," Lee wrote, noting that there could be additional improvements based on what happens between Russia and Ukraine and the Chinese lockdowns. 
Last month, J.P. Morgan maintained its positive stance on Micron (MU), as the investment firm believes the global DRAM market is set to rise 8% this year.