Citi Research has significantly increased its price target and earnings forecasts for Micron Technology, citing the continuation of a memory market supercycle with pricing momentum far exceeding prior expectations.
According to the report, Citi raised its price target for Micron Technology (MU) from $840 to $1,200 on June 17, maintaining a "Buy" rating, which represents a 43% increase. Concurrently, the firm raised its earnings per share (EPS) estimates for fiscal years 2026 and 2027 by 4% and 10%, respectively. The forecast for FY2027 EPS is now $114.73, approximately 4% above the current market consensus.
The primary rationale for this upgrade is the persistently stronger-than-expected memory pricing. Citi anticipates that, driven by robust data center demand and constrained supply, the average selling price (ASP) for DRAM will rise by 200% throughout 2026, with NAND ASPs increasing by 186% over the same period. This upward pricing trend is expected to continue into 2027. As of the close on June 19, Micron's stock price was $1,133, implying a roughly 6% upside to the new target.
Micron Technology is scheduled to report its fiscal third-quarter 2026 results (ending May) on June 24. The market will be closely watching management's updated commentary on long-term supply agreements and the supply-demand outlook.
Recent Quarterly and Full-Year Forecasts Revised Upward
The report also adjusted near-term quarterly estimates alongside the full-year revisions. Citi raised its revenue and EPS forecasts for the fiscal third quarter of 2026 by 6% and for the fourth quarter by 5%. The year-over-year EPS growth forecast for Q3 was revised from 1025% to 1092%, primarily based on a more optimistic pricing outlook.
Under the latest projections, Micron's core EPS for FY2026 is forecast at $60.73, surging to $114.73 for FY2027, and reaching $117.83 for FY2028. On the revenue front, Citi predicts Micron's FY2026 sales will hit $115 billion, increasing further to $197.5 billion in FY2027.
The expansion in profit margins is particularly noteworthy, reflecting the high leverage effect of rising memory prices on earnings. Citi expects Micron's gross margin to jump from 39.8% in FY2025 to 76.9% in FY2026, and further climb to 82.9% in FY2027.
Spot Prices Lead Gains, Contract Pricing Poised for Further Increases
The DRAM spot market has already reflected the tight supply-demand conditions. Data indicates DRAM spot prices have risen 52% since early January this year and 22% since early April. The current spot price premium over contract prices stands at 21%, which Citi views as an indicator that contract prices have further room to rise.
On a quarterly basis, Citi forecasts DRAM ASPs will increase sequentially by 37%, 13%, and 11% in Q2, Q3, and Q4 of 2026, respectively. NAND ASPs are projected to rise by 45%, 17%, and 6% over the same quarters, supported by strong demand and a slowdown in supply growth.
Supply-Demand Gap Expected to Persist Through 2027, HBM as Next Catalyst
Citi anticipates a global DRAM supply-demand gap of approximately 5% in 2026, with this imbalance expected to continue into 2027. The report notes that price increases this year have been concentrated in standard commercial DRAM rather than High Bandwidth Memory (HBM). It expects HBM pricing to see further increases next year, becoming a key driver for the next phase of price growth.
On the supply side, TrendForce projects overall DRAM industry output growth of about 30% in 2026, with Micron's own output expected to grow 42%. Citi also notes that continued DRAM shortages will accelerate the adoption of complementary NAND solutions, such as KV-cache offloading, a trend that could benefit both pure-play NAND companies and semiconductor equipment stocks.
Furthermore, the report specifically mentions instances of specification downgrades for the Vera Rubin platform due to limited DRAM supply, further highlighting the current supply bottleneck pressures.
Valuation Discount Reflects High Margin Risks, LSA Progress in Focus
Despite the optimistic outlook, Citi set its price target at 10 times the revised calendar year 2027 EPS, significantly below Micron's historical three-year peak multiple of 17x. This discount primarily reflects the risks of mean reversion from current high gross margin levels and supply uncertainty stemming from recent reports about the Vera Rubin specification downgrades.
Key issues for investors currently include Micron's updated supply-demand outlook for DRAM and NAND from 2026 to 2027, and the progress on signing Long-Term Supply Agreements (LSAs)—Citi believes Dell has already completed its signing. As Micron's June 24 earnings date approaches, management's latest commentary on these topics will directly impact market expectations.
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