02:09 PM EDT, 09/17/2024 (MT Newswires) -- Micron Technology's ( MU ) financial results are likely to be impacted by factors such as a potential slowdown in memory procurement from personal computer and smartphone customers, UBS Securities said in a note e-mailed Tuesday.

The memory and storage product maker is scheduled to report its fiscal fourth-quarter results Sept. 25. UBS trimmed its non-GAAP earnings outlook to $1.09 a share from $1.20 and its revenue estimate to $7.58 billion from $7.9 billion. Wall Street is looking for $1.11 and $7.68 billion, respectively, according to the brokerage.

Recent industry checks indicate a slowdown in memory procurement from smartphone and PC customers and increased supply from Chinese domestic memory suppliers CXMT and Yangtze Memory Technologies Corp., UBS analyst Timothy Arcuri said in a note to clients.

The brokerage now sees first-quarter revenue at $8.15 billion, down from its prior outlook of $8.97 billion and the Street's $8.46 billion view. UBS also lowered its earnings and revenue projections for fiscal 2024 and 2025.

The brokerage reduced its price target on the Micron stock to $135 from $153. UBS said it continues to see the stock as a buy on "recent weakness" as gross margin is expected to continue to move higher through the fourth quarter of fiscal 2025.

"We view this as the most important driver for the stock," Arcuri wrote. "While our revised estimates move us more in line with (the) Street, history says the stock still works as gross margin moves higher."

UBS expects high-bandwidth memory, or HBM, revenue to soar to $5.61 billion in fiscal 2025 from $603 million in 2024. "Despite the near-term air pocket in pricing, we expect pricing and gross margin will be up through the entirety of (2025) as (Micron) ramps HBM capacity and yields continue to move in the right direction," Arcuri said.

UBS said it a slowdown in dynamic random-access memory price increases is temporary as PC and smartphone customers will "likely come back to the table next year given the step up" in memory content for edge artificial intelligence applications.

Demand for conventional servers continues to be "firm" with stable inventory levels, the analyst wrote. The brokerage continues to expect double data rate, or DDR, contract pricing to improve from the first quarter of 2025 through the third quarter "as allocation of capacity to HBM continues to pressure DDR capacity," according to the note.

DDR is a type of memory technology.

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