Micron shares surge to all-time high as Wall Street cheers unprecedented contract visibility

Bank of America reiterated its Buy standing and lifted its terms people to $1,550 from $1,500, portion Wedbush maintained its bullish stance, with some firms pointing to Micron's increasing portfolio of strategical lawsuit agreements (SCAs) arsenic a defining improvement for the sector.

Micron reported fiscal third-quarter gross of $41.5 billion, up 74% year-over-year and good supra the Street's $35.9 cardinal estimate. Data halfway gross deed an annualized tally complaint of astir $100 billion.

Gross borderline came successful astatine 84.9%, topping statement of 81.7%, portion non-GAAP net per stock of $25.11 doubled quarter-over-quarter and surpassed expectations of $20.86.

Fourth-quarter guidance was arsenic striking, with Micron projecting gross of $50.0 cardinal against the Street's $43.6 cardinal estimate. Gross borderline is expected to scope astir 86%, with non-GAAP EPS guided to $31.

The header communicative was not conscionable the results but what lies ahead. Micron present has 16 SCAs successful place, with 14 of those carrying cumulative minimum gross commitments of astir $100 cardinal implicit the remaining statement terms. The deals see terms floors and ceilings, are backed by currency deposits and fiscal commitments, and transportation nary termination provisions.

Bank of America noted the agreements presently correspond astir 20% of DRAM output and one-third of NAND sales, but Micron expects SCAs to yet screen astatine slightest fractional of full institution revenue, generating astir $100 cardinal successful remaining show obligations.

"The agreements are guaranteed by currency deposits and fiscal commitments and bash not incorporate provisions allowing for the termination of terms," Wedbush noted, underlining the structural displacement this represents for a assemblage historically defined by cyclical roar and bust.

With escaped currency travel margins expected to attack 50-60%, some firms flagged a important inflection successful shareholder returns. Micron announced plans to instrumentality 100% of excess escaped currency travel to shareholders opening successful December, erstwhile CHIPS Act restrictions connected definite uses of currency expire.

Bank of America said buyback enactment is apt to measurement up materially, noting that adjacent $32 cardinal successful repurchases for fiscal 2027 would correspond lone astir 25% of imaginable escaped currency travel generation. The steadfast sees shares implying a astir 10% escaped currency travel output astatine existent levels.