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<Research> UBS Lifts Micron Technology, Inc. (MU.US) TP to USD1,625, Raises Earnings Forecasts, Reiterates "Buy"
UBS issued a report stating that as long-term supply agreements (LTA) are now firmly established across most regions in the industry, the bank has again raised its forecasts for Mi...
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<Research> UBS Lifts Micron Technology, Inc. (MU.US) TP to USD1,625, Raises Earnings Forecasts, Reiterates "Buy"
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UBS issued a report stating that as long-term supply agreements (LTA) are now firmly established across most regions in the industry, the bank has again raised its forecasts for Micron Technology, Inc. (MU.US)      for 2027 to 2029. It expects EPS to remain robustly above USD100 during this period, while Micron Technology, Inc. is projected to generate more than USD400 billion in free cash flow over the same timeframe.

The bank believes the market will begin assigning a more "normal" multiple to the stock. As more details emerge regarding the structural transformation driven by AI across the memory industry, Micron Technology, Inc. is expected to continue undergoing re-rating. UBSs supply chain research on long-term agreements in the memory sector indicates that up to 30% of industry-wide DDR production will soon be locked in at prices slightly below current levels. These agreements will allow Micron Technology, Inc. to trade part of its near-term revenue for demand visibility and smoother earnings performance.

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Accordingly, UBS raised its EPS forecasts for fiscal 2027 to 2029 to USD155, USD167 and USD117, respectively (previously USD133/USD122/USD77). Considering that investors typically reward stocks with durability and visibility, the bank believes Micron Technology, Inc.s EPS will remain above USD100 through 2029, underscoring a structural shift that should support a move toward broader semiconductor multiples. In conclusion, UBS sharply lifted its TP from USD535 to USD1,625, based on a forward P/E multiple of approximately 15x, which it believes should not differ materially from that of NVIDIA Corporation (NVDA.US)      , in line with its three-year average, and reiterated a Buy rating.

In the DRAM segment, UBS estimates that about 20% to 30% of industry DDR bit shipments in 2027 will now be covered by "enhanced" long-term agreements. By company, it assumes 18% for SK hynix, 20% for Micron Technology, Inc., and 30% for Samsung under fixed-price contract volumes, with the remaining pricing still floating. Currently, UBS believes that hyperscale cloud service providers alone have secured approximately 60% to 70% of industry server DDR5 output under "enhanced" long-term agreements, effectively guaranteeing offtake for this portion of Micron Technology, Inc.s and other manufacturers production.

The bank now expects the DRAM industry to remain in supply shortage at least until 2Q28 (previously 4Q27), while NAND supply shortages are projected to last until 4Q27 (previously 3Q27). Compared with its previous model, another upside driver stems from higher assumed HBM average selling prices (USD/GB). (da/u)(Real-time Streaming US Stocks Quote; Except All OTC quotes are at least 15 minutes delayed.)

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