An analysis report from investment bank TD Cowen about Micron Technology$Micron Tech(MU.US):
Cowen analysts are not bullish on a short-term surge in Micron's stock price.
They believe:
• Even if 2027 earnings per share (EPS) can reach $110, there isn't much room for stock price appreciation.
• The gross margin (profit margin) in Micron's long-term agreements (LTAs) with customers is capped: a minimum of around 60% (floor) and a maximum of over 80% (ceiling).
• The current stock valuation is only 5 times 2027 P/E, indicating the market already expects future gross margins to fall to this low level of 60%.
• Historically, when gross margins fall from high levels, short-term stock performance has been poor (negative impact).
Cowen is cautious/bearish on Micron in the short term, believing profit margins will decline and the stock price is unlikely to deliver major positive surprises.
It will most likely fluctuate between 450-550.
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