Micron Technology Seen With Increasingly Positive Duration Tone, Capital Returns Outlook, UBS Says

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Micron Technology (MU) has an increasingly positive outlook on memory-cycle duration and capital returns and delivered a solid guidance, UBS Securities said in a Thursday note.

The company reported a fiscal Q4 adjusted earnings late Wednesday of $33.42 per diluted share, up from $3.03 a year earlier and above FactSet analysts' estimate of $31.72. Revenue for the quarter ended Sept. 3 was $54.23 billion, up from $11.32 billion a year earlier and exceeded the consensus estimate of $51.33 billion.

UBS said HBM migration and long lead times for new fabrication capacity are tightening supply, with customers extending agreements into 2031. About 35% of Micron's revenue is now covered by such strategic customer agreements, up from 20% to 25% previous quarter.

Management expects to reach its target cash balance by fiscal Q1 and return excess cash to shareholders, primarily through share repurchases, the firm noted. UBS said it estimates free cash flow of about $150 billion in fiscal 2027 and $190 billion in fiscal 2028, potentially supporting buybacks equal to about 30% of the company over two years.

Micron guided fiscal Q1 revenue of $61.5 billion and EPS of $38.15 at the mid-point, better than the firm's revenue preview with EPS upside somewhat offset by gross margin, according to the note.

UBS maintained its buy rating on the stock with a price target of $1,625.

Price: 1047.03, Change: -18.08, Percent Change: -1.70

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