Micron Forecasts Are Higher, But MU Stock Is Off Its Peak and 2-Week Puts Yield 5.8%
Micron Forecasts Are Higher, But MU Stock Is Off Its Peak and 2-Week Puts Yield 5.8%.
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Analysts covering Micron Technology (MU) continue to raise their annual revenue forecasts for Aug. 2027 as well as their price targets. But MU stock is off its peak. That presents an opportunity for value buyers.
For example, 2-week out-of-the-money MU puts now yield over 5.8% for short-sellers. This article will show how that works.
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MU stock closed at $984.75 on Monday, July 6, well below its recent peak price of $1,209.19 on June 25. However, it could be worth substantially more based on its free cash flow (FCF) margins and analysts' revenue forecasts.
I have written several Barchart articles where I showed how I set a price target for MU stock based on these two inputs.
For example, on June 26, I wrote an article (" Micron Skyrockets After Huge Revenue Upgrade - Could MU Be Worth $2,500 Per Share? ) where I showed that MU could be worth between $2,251 and $2500 per share over the next few years
That was based on $225.71b FY 27 revenue forecasts and either a 45% FCF margin or a 50% FCF margin. I used a 4% FCF yield metric to derive a fair market value (FMV).
However, since then, analysts have raised their FY 2027 revenue forecasts to $234.24 billion.
As a result, using a lower 45% FCF margin assumption, and a 4% FCF yield metric, Micron could be worth:
That is still 136% over Micron's market cap today of $1,112 billion, according to Yahoo! Finance. In other words, the price target is 136% over today's price:
However, using a 50% FCF margin assumption, it could be worth significantly more:
So, now, based on higher revenue price targets, MU is worth between $2304 and $2,593 per share.
Moreover, analysts have substantially raised their price targets. For example, Yahoo! Finance reports that the average of 45 analysts is now $1,486.00 . That is up from $828.72, as seen in my June 14 Barchart article. Similarly, Barchart's mean analyst survey price is now $1,416.39, up from $872.77 on June 14.
In addition, AnaChart, which tracks recent analyst write-ups, shows an average PT of $1,234.45 from 28 analysts.
The bottom line is that analysts have now raised their price targets well over the present stock price. You can see why. Their own revenue forecasts are substantially higher. In other words, they expect to see high memory chip prices for at least the next year.
