Bank of America: Micron's Strong Performance Could Reshape Micron's Valuation, Reiterates "Buy" Rating with $155 Target Price

BlockBeats News, August 18: Bank of America (BofA) believes that SanDisk's recently announced long-term growth target may provide a reference for Micron Technology (MU)'s valuation reset, and reiterates a "Buy" rating for Micron with a target price of $155.0, about 61% higher than the $96.3 stock price used in the report.

SanDisk projected at its Investor Day that future sales would grow by nearly 15% annually, and the gross margin would rise to over 80% by fiscal year 2030. BofA believes that if Micron can also maintain similar growth and profit margins under AI-driven HBM demand and supply discipline, its business may no longer be solely seen as a traditional cyclical storage business.

BofA expects Micron's FY30 earnings per share to reach $200 to $250, and if a higher valuation is given to the AI-related HBM business, its profit and valuation potential will further expand. The bank also projects that as the profitability of the storage industry improves, Micron could achieve a future P/E ratio of 12 to 15 times, no longer being priced by the market solely based on the traditional storage cyclical stock valuation.

In terms of cash flow, BofA expects Micron to increase its stock repurchase efforts after the expiration of the CHIPS Act-related restrictions on December 9, 2026. The bank estimates that by then, Micron's trailing twelve-month free cash flow could exceed $80.0 billion, theoretically enough to repurchase nearly 10% of its market capitalization in shares annually, further driving EPS growth by reducing the share count.

BofA believes that Micron's future success will depend on three key factors: whether the high gross margin can be sustained, if the management can strictly execute the capital return plan, and the demand and price trend of HBM.