Morgan Stanley Reiterates on Micron Technologies
In a report published Wednesday, Morgan Stanley analyst Alicia Tam reiterated Equal-weight on Micron Technologies (NASDAQ: MU), keeping its price target NA.
According to the report, it has been a very good quarter, above consensus estimates. It is believed that earnings are above trend due to Hynix fire, but the analysts are encouraged by MU's execution. It is also believed the stock grinds higher as long as pricing remains strong, but sustainability concerns linger.
“Primary variance from our model was DRAM bit growth well above our estimates (69% vs. 45% guidance), as organic growth at Elpida+MU appeared to be about 20% sequentially,” the report said. “This had some impact on other line items (prices lower than our ests due to upside from PC/mobile mix, but better cost improvements with more bits vs. fixed costs). Opex also substantially lower, which was $0.03 of upside vs. our model. We expect earnings to peak in the February quarter (though forecasting memory is an inexact science), with still solid earnings in 2h14. Operating margins in Feb of 23% are similar to what MU has typically seen at cycle peaks, similar to peers, and we continue to be cautious about paying a high multiple for peak earnings.”
MU closed Tuesday at $21.73 with shares trading up at 5.13 percent.
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