UPDATE: Nomura Reiterates Neutral Rating, Raises PT on Micron Technology on Raised Estimates
In a report published Wednesday, Nomura reiterated its Neutral rating on Micron Technology (NASDAQ: MU), and slightly raised its price target from $7.00 to $8.00.
Nomura noted, “Micron‘s DRAM business is improving, but we see little leverage beyond the May-13 quarter. PC demand aside, we would like to get a better understanding of the integration process when the Elpida deal closes. While we have raised our estimates, we think the stock is already pricing in a lot of DRAM upside. The new Inotera agreement essentially locks in the margin for 70% of the DRAM business. We expect the financial impact to be mostly felt in FQ3 (May), with DRAM gross margin increasing to 20%, from 6% in FQ2 (Feb). Thereafter, we expect margins to be much less volatile. Investors looking for further leverage may be disappointed. We are raising our price target from $7 to $8, which is based on 1.1x our estimated CY13 book value. Given the changing industry dynamics, we think a valuation range of 1.0x-1.25x book (versus 0.6x-1.4x in the previous cycle) is appropriate.”
Micron Technology closed on Tuesday at $8.12.
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