Citi Raises Micron Price Target to $1,200, Q3 EPS Expected to Surge 1,092% YoY
Miles Bennett
Citi lifted its Micron target price 43% from $840 to $1,200, driven by memory prices running far above expectations. This means → Citi sees the memory super-cycle as far from over, with Micron sitting in a window of rapid margin expansion.
A 43% target hike in one move — what did Citi see?
Citi raised Micron's (MU.US) target from $840 to $1,200 on June 17, maintaining a Buy rating.
The thesis rests on one driver: DRAM and NAND prices have far exceeded prior forecasts, and the memory super-cycle is still running.
Micron closed at $1,133 on June 19. The new target implies roughly 6% upside. This means → Citi believes the current price still does not fully reflect the earnings pull from rising memory prices.
How much did earnings estimates go up — and where does 1,092% growth come from?
Citi raised Micron's FY2026 and FY2027 EPS forecasts by 4% and 10% respectively. The FY2027 EPS estimate is $114.73, about 4% above consensus.
Near-term quarters were revised up in tandem: FY2026 Q3 revenue and EPS raised 6%, Q4 raised 5%.
Q3 year-on-year EPS growth was revised from 1,025% to 1,092%. In plain terms = Micron earned only a few dollars per share in the year-ago quarter; this quarter it is expected to earn tens of dollars — that is why the multiple looks extreme.
Gross margin surging from 40% to 83% — how?
Citi forecasts Micron's gross margin expanding from 39.8% in FY2025 to 76.9% in FY2026, then to 82.9% in FY2027.
This reflects the extreme operating leverage in memory: manufacturing costs stay roughly flat, so when prices rise, nearly all the upside flows straight to profit.
Revenue forecasts were raised in step: $115 billion for FY2026, growing to $197.5 billion in FY2027.
Spot prices already up 52% — can contract prices keep climbing?
DRAM spot prices have risen 52% since early January and 22% since early April. Spot now trades at a 21% premium to contract prices.
This means → the spot market has already priced in tight supply; contract prices typically follow with a lag, and the premium is the signal that the catch-up is not over.
Citi expects DRAM ASPs to rise quarter-on-quarter by 37%, 13%, and 11% in Q2–Q4 2026; NAND ASPs are forecast up 45%, 17%, and 6% over the same quarters.
For the full year, Citi projects 2026 DRAM ASPs up 200% and NAND ASPs up 186%, with the uptrend extending into 2027.
How large is the supply gap, and why is HBM the next catalyst?
Citi estimates a ~5% global DRAM supply shortfall in 2026, persisting into 2027.
This year's DRAM price gains have been concentrated in commodity DRAM, not HBM — high-bandwidth memory, purpose-built high-speed memory for AI chips. This means → the HBM pricing cycle has not truly started yet; price increases next year become a fresh profit driver.
TrendForce forecasts ~30% industry-wide DRAM output growth in 2026; Micron's own output is expected to grow 42%.
Citi also notes that persistent DRAM shortages are accelerating adoption of complementary NAND solutions such as KV-cache offloading — moving some data from scarce DRAM onto NAND — a tailwind for pure-play NAND names and semi-equipment stocks.
The target implies only 10× PE — why so "conservative"?
Citi set the target at 10× adjusted calendar-year 2027 EPS, well below Micron's three-year peak multiple of 17×.
In plain terms = Citi is sharply raising its earnings forecasts while deliberately compressing the valuation multiple, building in a cushion for margins to revert from peak levels.
Reports that Nvidia's Vera Rubin platform has been spec-reduced due to DRAM supply constraints add supply-side uncertainty.
The key near-term watch: Micron reports FY2026 Q3 results on June 24. Management's update on long-term agreement (LTA) signings and supply-demand outlook will determine whether the market accepts the high-margin assumptions embedded in the current valuation — Citi believes Dell has already signed.
Content is for reference only, not financial advice.