Micron: Double Digit Growth In FY2025 (Rating Upgrade)

Summary:

  • Micron’s strong revenue growth in FY2024, driven by DRAM and NAND ASP improvements, leads to a revised gross margin forecast of 33.3%.
  • Elevated inventory levels support volume growth, with management planning to use existing inventory for FY2025, ensuring continued shipment growth.
  • Market pricing recovery for DRAM and NAND is expected to continue through 2024, with a slight decline in 2025, aligning with long-term forecasts.

Micron office building in San Jose, California, USA - June 8, 2023.

JHVEPhoto

In our previous analysis of Micron Technology, Inc. (NASDAQ:MU), we highlighted the company’s strong revenue growth outlook for FY2024 driven by strong demand for HBM memory and improved market conditions. The company’s profitability exceeded expectations due to

Micron Revenue ($ bln)

Q1 FY2024

Q2 FY2024

Q3 FY2024

Q3 FY2024 YTD

Our FY2024 Forecast Growth %

Unit Shipment Growth YoY

75%

56%

35%

54.1%

-4.3%

ASP Growth YoY

-30%

-1%

31%

-2.7%

82.8%

DRAM Revenue

3.4

4.2

4.7

12.3

19.3

DRAM Growth YoY

21.4%

55.6%

74.1%

50.0%

75.0%

Unit Shipment Growth YoY

15%

4%

2%

8.7%

-9.4%

ASP Growth YoY

-5.4%

73.3%

102.5%

51.0%

28.7%

NAND Revenue

1.2

1.6

2.1

4.9

4.9

NAND Growth YoY

35.6%

80.8%

110.0%

64.2%

16.6%

Total DRAM and NAND

4.6

5.8

6.8

17.2

24.4

Growth YoY

18%

62%

84%

53.8%

56.9%

Micron Inventory Ratios ($ mln)

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

TTM (Q3 FY 2024)

Average

Inventory

2,455

2,340

2,889

3,123

3,595

5,118

5,373

4,487

6,663

8,387

8,512

Growth %

-4.7%

23.5%

8.1%

15.1%

42.4%

5.0%

-16.5%

48.5%

25.9%

1.5%

Revenue

16,358

16,192

12,399

20,322

30,391

23,406

21,435

27,705

30,758

15,540

21,371

Inventory % of Revenue

15.0%

14.5%

23.3%

15.4%

11.8%

21.9%

25.1%

16.2%

21.7%

54.0%

39.8%

23.5%

Inventory Days Outstanding

51

105

138

137

158

218

207

162

207

296

243

175

Market Pricing Forecast

2017

2018

2019

2020

2021

2022

2023

2024F

2025F

2026F

DRAM ASP

4.81

5.78

3.04

3.29

4.26

3.33

2.52

4.98

4.94

5.06

Change %

80.8%

20.2%

-47.4%

8.2%

29.6%

-21.9%

-24.3%

97.5%

-0.8%

2.5%

NAND ASP

0.26

0.17

0.09

0.08

0.077

0.050

0.044

0.051

0.048

0.046

Change %

18%

-35%

-46%

-14%

-1.96%

-36.0%

-12.0%

18.0%

-6.6%

-4.4%

Micron Revenue Projection ($ bln) (FY)

2023

2024F

2025F

2026F

DRAM

11.02

19.03

24.32

25.80

Growth %

-50.8%

72.6%

27.8%

6.1%

NAND

4.20

6.33

6.45

6.58

Growth %

-46.2%

50.7%

1.9%

2.0%

Others

0.36

0.26

0.22

0.22

Growth %

-14.9%

-36.5%

-27.8%

-16.0%

Total Revenue

15.54

25.62

30.98

32.60

Total Growth %

-49.48%

64.85%

20.95%

5.21%


Analyst’s Disclosure: I/we have a beneficial long position in the shares of MU either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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