Micron Stock Trading at 9.2x P/E Despite 325% Year-to-Date Surge, Analysts Expect Re-Rating

Micron Technology shares, which have rallied 325% year-to-date, are trading at an estimated forward price-to-earnings ratio of 9.2x, suggesting significant valuation upside, according to UBS and TD Cowen analysts.

UBS analyst Timothy Arcuri expects the stock to receive a "re-rating" as Micron and SanDisk lock in long-term supply contracts with customers that establish price floors around $6 per gigabyte, providing greater earnings predictability. Under this scenario, if half of Micron's business margins normalize to 35% from current elevated levels, the company could sustain a mid-50s profit margin while supporting higher valuation multiples. TD Cowen analyst Krish Sankar set a $1,600 price target, valuing long-term contract earnings at 20x P/E while pricing legacy operations at 7x P/E.