Credit Suisse Remains Bullish On Micron After Analyst Day

The semiconductor devices research team at Credit Suisse remains bullish on Micron Technology MU following the company's analyst day on August 9. They notes four key takeaways from the presentation that confirm their bullish thesis. Credit Suisse reiterated its outperform and near street-high price target of $20.

The four key takeaways from the investor day were:

• Micron updated its financials from the purchase of Elpida and now sees annualized EPS accretion of at least $1.30 from purchase accounting, well ahead of the street consensus of $1.00 but in line with CS forecasts.


• Ongoing operating cash flow of about $525 million was better than CS originally expected.


• Micron stated it is committed to using excess cash to improve its balance sheet and/or buyback stock.


• Micron gave several reasons why the supply issue in the chip industry environment is stable, noting industry consolidation, diversification of end demand, increasing capital intensity, and rational behavior more in-line with generating long term shareholder value.

Elpida Accretion

Credit Suisse was bullish on Micron following the purchase of Elpida, however they note that the street could be catching up to their forecasts. "Management provided updated quarterly run-rates for Elpida, which would imply annualized EPS accretion of approximately $1.30 – we would highlight that this is ABOVE Street expectations of $1.00 accretion. We think that there is a discrepancy between Company's Cash Flow from Operations guidance and operating income guidance which could indicate upside to operating income."