Citi raises Micron's target price to $1200, Q3 year-over-year profit growth forecast raised to 1092%.

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Citi Research has significantly raised its target price and earnings forecast for Micron Technology, believing the memory market’s super cycle is still continuing, with price momentum far exceeding previous expectations.

According to Chase Wind Trading Desk, Citi in its June 17 report raised Micron Technology’s target price from $840 to $1,200, maintaining a "Buy" rating, an increase of 43%. Meanwhile, the team raised its earnings per share forecasts for Micron’s fiscal year 2026 and 2027 by 4% and 10%, respectively. The 2027 fiscal year EPS forecast is $114.73, about 4% higher than the consensus estimate.

The core logic behind this increase is the memory prices continuing to surpass expectations. Citi expects, driven by strong data center demand and limited supply, the average selling price of DRAM will rise 200% throughout 2026, and NAND’s average selling price will also rise 186% during the same period, with the upward price trend expected to extend into 2027. As of the close on June 19, Micron’s stock price was $1,133, implying about 6% upside to the new target price.

Micron will release its fiscal 2026 third quarter (ending May) results on June 24. Management’s latest comments on long-term supply agreements and supply-demand outlook will be the focus of market attention.

Recent quarterly forecasts simultaneously raised, fiscal year earnings outlook jumps significantly

Not only are annual forecasts adjusted, but recent quarterly estimates are also raised simultaneously. The report raises forecasted revenue and EPS for fiscal Q3 2026 by 6%, and Q4 by 5%. Q3 EPS year-over-year growth is raised from 1,025% to 1,092%, mainly based on more optimistic pricing expectations.

According to the latest forecasts, Micron's core EPS for fiscal 2026 is $60.73, rising further to $114.73 in fiscal 2027, and reaching $117.83 in fiscal 2028. On the revenue side, Micron is projected to reach $115 billion in fiscal 2026, and further increase to $197.5 billion in fiscal 2027.

The profit margin expansion is particularly significant, fully reflecting the high leverage effect of memory price increases on profitability. Citi expects Micron's gross margin to expand sharply from 39.8% in fiscal 2025 to 76.9% in fiscal 2026, rising further to 82.9% in fiscal 2027.

Spot prices lead the way, contract prices still have room to rise

The DRAM spot market has already reflected the tight supply-demand situation. Data shows DRAM spot prices have risen 52% since early January this year, and 22% since early April. Currently, spot prices are at a 21% premium over contract prices, and Citi believes this spread suggests contract prices still have room to continue rising.

Quarter by quarter, Citi estimates DRAM average selling prices will rise 37%, 13%, and 11% in Q2, Q3, and Q4 of 2026, respectively; NAND average selling prices in the same quarters are expected to increase by 45%, 17%, and 6%, supported by strong demand and slowing supply growth.

Supply-demand gap to persist to 2027, HBM becomes next stage’s core catalyst

Citi expects the global DRAM market will have a supply gap of about 5% in 2026, with this supply-demand imbalance continuing into 2027. The report notes DRAM price increases this year have mainly been in standard commercial DRAM, not high-bandwidth memory (HBM); HBM pricing is expected to further improve next year, becoming the major driving force in the next stage of price increases.

On the supply side, TrendForce forecasts the overall DRAM industry output will grow about 30% in 2026, with Micron’s own output growth expected at 42%. Citi also notes that continued DRAM shortages will accelerate the adoption of complementary NAND solutions, such as KV cache offloading technology, which is expected to benefit both pure NAND targets and semiconductor equipment stocks.

In addition, the report specifically mentions the Vera Rubin platform experiencing specification downgrades due to limited DRAM supply, further confirming the real pressure of current supply bottlenecks.

Valuation discount reflects high profit margin risk, long-term agreement progress of concern to investors

Despite the optimistic outlook, Citi sets the target price at 10 times corrected 2027 calendar year EPS, significantly lower than Micron’s historical three-year peak valuation of 17 times. This discount mainly reflects the risk of mean reversion due to currently high gross margins and supply uncertainty brought by recent Vera Rubin downgrade reports.

Core issues investors are currently focused on include: Micron’s updated 2026–2027 DRAM and NAND supply-demand outlook, and progress on long-term supply agreements (LTA)—Citi believes Dell has already signed. As Micron’s June 24 earnings approaches, management’s latest remarks on these issues will directly shape market expectations.

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